MSE News: Budget 2023: Energy Price Guarantee to remain at £2,500 in win for Martin Lewis and MSE

Chrysalis

EssexHebridean said:

The problem is that it was established originally that the "best" way of giving help that would reach the majority of those needing it was just to do it across the board - so the EBSS and the EPG. If you heat using wood then presumably you can also apply for the alternative fuels payment too - so another £200 incoming there...

I think the £400 is ok as its felt more by lighter users (who are typically also poorer) and by nature of its fixed amount has limited exposure.  But the original form of it as a £200 loan was obviously misjudged.  I think COL payments are ok, but the EPG which came out of truss's government feels like a big net to catch large swaths of voters.

Deep down I expect sunak agrees, but the political reality led him to keep the EPG in place of more targeted help.

BikingBud

Sea_Shell said:

diystarter7 said:

superkoopauk said:

bristolleedsfan said:

superkoopauk said:

One thing that doesn't appear to be picked up on is that some customers who were on a fixed tariff originally well above £2500 level will see their prices go up from April as the EPG support they receive is less.  There wont be many still on these tariffs now but it will be counter intuitive for the ones that are to see a price increase notice come through the door!  

 EPG discount from 1 April will be broadly similar to what it was 1 October - 31 December, everyone who was on much more expensive fixes were able to change to SVR around about that time.

Agreed - they should of switched back then but that probably wont soften the blow!

Hi

What the government must do is put a stop to the profiteering by the big boys. The government should also speed up nuclear power rather than just talk about it as this would make supplies a lot cheaper.

Longer term the gov should give grants to everyone with a property to properly insulate their homes.

Thnaks

@diystarter7

Have you watched the series Guy Martin did recently on power.    Really interesting to see what actually goes on behind the scenes of power generation and distribution.   It's an eye opener.   


It's probably still available on Channel 4 catch up.

Is that the same programme where he said the pricing system is a scam "whoever's the dearest they all just jump on the bandwagon" and " it's a ridiculous system" and "they're having our eyes out"

Mstty

Chrysalis said:

Mstty said:

It may be a win for Martin Lewis (debatable as it was a vote winner anyway and he had no influ nice on the chancellor whatsoever) but it is a loss for taxpayers and the future debt burden of generations to come as stated on other threads unnecessary between April-Jun imo.

You think that the unit prices for the typical £3000 bill is not too high for the poorest then?

Including the loss of the £400 it is of course even more.

I find it concerning we moving in a direction thats trying to normalise the new costs in society, it all points to this, gradual reduction of EPG, gradual reduction of cost of living payments (£650 this year and rest the next instead of the reported £900 this year), and of course the removal of the £400..

I know its funded from taxpayers and its subsidising fossil fuels energy, but its not as simple as you make out, because if people have less money due to paying more for energy they spend less in the wider economy, there is less tax revenues, less jobs, less growth which also means its a future burden.

I feel they could have reduced taxpayer exposure by just making it more sensible instead of trying to avoid offending middle and higher earners, two clear options, only discount the first X units of usage, reducing the cost of the scheme, and/or means test the support (with tapering).  This perhaps would be similar to the £400 scheme, a monthly rebate, that dynamically changes based on wholesale cost, and based on income.  This would have a maximum fixed amount so the government wouldnt be exposed to fully subsidising high levels of usage.  The issue being of course they trying to keep as many voters on side as possible hence the wide net.  This scheme I think I would have replaced the WHD and (part of) cost of living payments with it.  To also reduce complexity in energy cost support.

Hi, haven't seen you for some time so you might not have seen all the other discussions on the 1st April EPG.

My main point of this is that from April 1st and the "poorest" as you put it whatever that measurement is are likely to pay by prepayment. So that takes the direct debit debate out of this discussion immediately. So from 1st April til 30th June those people on prepayment should have been able to tailor their usage down or below the cost of living payment due this spring from 20th March of £301. Or at least drastically reduced their monthly outgoings using some of this payment for those 3 months and also other cost of living rises.

To put this all into perspective if we had received all the benefits on offer from 1st April 2022 to date, which the section of the population I think you are targeting, we could have run the whole 4/5 bedroom house energy costs for less than £500. So in my opinion the benefits and handouts have been too much as they have artificially lowered the true cost of energy to pre energy crisis levels. The 1st April 2024 imo was a good time to ween everyone off the handouts.

I know why the chancellor and PM have done this. It's a vote winner and aligning themselves with the people's champion ML. It's a good relationship ML boosts his popularity and the Government win votes they are both using each other.

The best we can all hope for now is that predictors such as Cornwall Insights have got their numbers correct for 1st July and 1st October.

Now just so you don't think we are completely heartless we donated the AFP payment that we should not have got to a local warm space and foodbank. We have also donated more food to foodbanks than any other year. We have also introduced rent freezes on the flats we rent out and refunded each flat for the communal lighting that we got £400 for so they got an extra £57 each.

Qyburn

MattMattMattUK said:.

The two main issues that mean there will likely be greater outages in the future are an imbalance between generation and demand and extreme weather events. We have less spare capacity in on the generation side than we have had for many decades, I think you have to go back to the fifties to find narrower margins and back then brownouts were the easy solution, but modern electronics fail in brownouts, we also used to be self sufficient for the required hydrocarbons used in generation, where as now we are reliant on international supplies. The other is extreme weather events, . 

It's perfectly clear that the main reason is neglect of the distribution network. Arwen was a severe storm, not once-in-a-lifetime severity but it was the first severe Northerly gale for maybe a couple of decades (I can't remember the last). So it hit things that may have been vulnerable for years. Today there are still huge numbers of trees within toppling distance of power lines. Nobody but SSEN is allowed to touch them, so when areas are felled these trees are left.

Other related impacts were due to organisations operating on the presumption of 100% supply reliability. Public water supplies and mobile networks without backup power, council houses "upgraded" by removing any ability to use solid fuel or indeed anything except electricity.

MattMattMattUK

Chrysalis said:

Mstty said:

It may be a win for Martin Lewis (debatable as it was a vote winner anyway and he had no influ nice on the chancellor whatsoever) but it is a loss for taxpayers and the future debt burden of generations to come as stated on other threads unnecessary between April-Jun imo.

You think that the unit prices for the typical £3000 bill is not too high for the poorest then?

Including the loss of the £400 it is of course even more.

No, because of multiple factors, the huge drop in usage due to seasonal variations, the £900 handout and the 10.1% increase in benefits. 

Chrysalis said:

I find it concerning we moving in a direction thats trying to normalise the new costs in society, it all points to this, gradual reduction of EPG, gradual reduction of cost of living payments (£650 this year and rest the next instead of the reported £900 this year), and of course the removal of the £400..

Why is it concerning that we normalise costs? Costs can only be exceptional for a short period of time, then they stop being exceptional and become normal. Extraordinary actions can only happen for a limited amount of time. In the last twelve months low earners got £650 of handouts, over the next twelve months they will get £900. The £400 was not "removed", it was a fixed amount over a fixed term which had come to an end.

Chrysalis said:

I know its funded from taxpayers and its subsidising fossil fuels energy, but its not as simple as you make out, because if people have less money due to paying more for energy they spend less in the wider economy, there is less tax revenues, less jobs, less growth which also means its a future burden.

There would be a greater burden from additional borrowing which is already fast approaching unsustainable levels. There will be a contraction in one groups consumer spending but there are better ways to stimulate economic growth than borrowing for energy subsidies.

Chrysalis said:

I feel they could have reduced taxpayer exposure by just making it more sensible instead of trying to avoid offending middle and higher earners, two clear options, only discount the first X units of usage, reducing the cost of the scheme, and/or means test the support (with tapering).  This perhaps would be similar to the £400 scheme, a monthly rebate, that dynamically changes based on wholesale cost, and based on income.  This would have a maximum fixed amount so the government wouldnt be exposed to fully subsidising high levels of usage.  The issue being of course they trying to keep as many voters on side as possible hence the wide net.  This scheme I think I would have replaced the WHD and (part of) cost of living payments with it.  To also reduce complexity in energy cost support.

A discount on the first X kWh then market rate after would have been sensible but it was also viewed as unworkable in the short period of time they had to implement the system with the billing systems the suppliers had to work with and the reality is that whilst it would have hit high users with swimming pools it would have also hit disabled people with medical issues who needed a lot of energy because of medical needs. Monthly cash rebates also favour low users who are not usually the least well off, the lowest users are generally those with solar, battery storage and heat pumps. There is also the political fact that the public has to be kept on side, embarking on an additional £60 billion of borrowing to spend on energy subsidies when the country has it's largest ever debt and there are far more pressing funding needs such as the health and social care system has to involve an element of self benefit. People are not going to accept that kind of borrowing and handouts to others if they see nothing from it. There was a benefit in reduction in the rate of inflation from the blanket nature, but perhaps that was too nuanced for many to understand. 

Chrysalis said:

But bear in mind the cost of keeping it at the current level is not extra money, its out of already budgeted money as the cap was not predicted at the time of the announcement to go as low as it will be going.

It is extra money because it is borrowing that would not have needed to have been borrowed otherwise. Just because a budget line exists does not mean that the money must be spent and indeed to spend all budget lines to maximum would be fiscally irresponsible. 

Chrysalis said:

Depending on point of view of course future debt is worth having if it relieves poverty today.  If your only worry is about future debt, then perhaps you dont understand the extent of the harsh conditions people are living under right now.  There is people celebrating they managing to top up their energy by £10 so they have heating for a few hours for the first time in weeks.

My view is that it is not worth burdening out children and grandchildren further, especially keeping in mind the huge debt we are already imposing on them. Every billion we borrow sucks around £60 billion a year out of the government's budget to spend on things like healthcare, social care, education, even things like fixing the potholes in the roads. Borrowing is not free, it has to be repaid with interest on top, that can be worth it if the borrowing is for investment in the nations future but it is not worth it for a short term boost to living standards. The £900 will cover most or all of a low users energy usage over the twelve months and the 10.1% increase in benefits kicks in next month. Inflation is no fun for anyone, but those on a low income are being insulated against most of it in with benefits rises and handouts.

silverwhistle

As pointed out borrowing to spend on current expenditure and not on investment is not maintainable longer term. It may be necessary in the short term, but in the longer term we need investment and better benefits for those that need them.

I'm a low user as I was lucky enough to have some savings and invested in solar panels 10 years ago. My car was old and kitchen needed updating but I went for the longer term infrastructure investment. In the new financial year I'm going to review my energy bill and hope to add an additional (to my regular DD) cheque to my local foodbank as my unchanged £20 a month energy direct debit has left me with only a small debt to pay after the 6 month's help.

George Osborne introduced austerity 13 years ago but unfortunately cut investment in schools, hospitals, training, housing and anything that could be ignored for a few years, and the results are now becoming evident in a sub-optimal economy and poor living conditions. Just spending money now to burn fuel to heat old and badly insulated homes cannot continue in the longer term.

Chrysalis

Mstty said:

Chrysalis said:

Mstty said:

It may be a win for Martin Lewis (debatable as it was a vote winner anyway and he had no influ nice on the chancellor whatsoever) but it is a loss for taxpayers and the future debt burden of generations to come as stated on other threads unnecessary between April-Jun imo.

You think that the unit prices for the typical £3000 bill is not too high for the poorest then?

Including the loss of the £400 it is of course even more.

I find it concerning we moving in a direction thats trying to normalise the new costs in society, it all points to this, gradual reduction of EPG, gradual reduction of cost of living payments (£650 this year and rest the next instead of the reported £900 this year), and of course the removal of the £400..

I know its funded from taxpayers and its subsidising fossil fuels energy, but its not as simple as you make out, because if people have less money due to paying more for energy they spend less in the wider economy, there is less tax revenues, less jobs, less growth which also means its a future burden.

I feel they could have reduced taxpayer exposure by just making it more sensible instead of trying to avoid offending middle and higher earners, two clear options, only discount the first X units of usage, reducing the cost of the scheme, and/or means test the support (with tapering).  This perhaps would be similar to the £400 scheme, a monthly rebate, that dynamically changes based on wholesale cost, and based on income.  This would have a maximum fixed amount so the government wouldnt be exposed to fully subsidising high levels of usage.  The issue being of course they trying to keep as many voters on side as possible hence the wide net.  This scheme I think I would have replaced the WHD and (part of) cost of living payments with it.  To also reduce complexity in energy cost support.

Hi, haven't seen you for some time so you might not have seen all the other discussions on the 1st April EPG.

My main point of this is that from April 1st and the "poorest" as you put it whatever that measurement is are likely to pay by prepayment. So that takes the direct debit debate out of this discussion immediately. So from 1st April til 30th June those people on prepayment should have been able to tailor their usage down or below the cost of living payment due this spring from 20th March of £301. Or at least drastically reduced their monthly outgoings using some of this payment for those 3 months and also other cost of living rises.

To put this all into perspective if we had received all the benefits on offer from 1st April 2022 to date, which the section of the population I think you are targeting, we could have run the whole 4/5 bedroom house energy costs for less than £500. So in my opinion the benefits and handouts have been too much as they have artificially lowered the true cost of energy to pre energy crisis levels. The 1st April 2024 imo was a good time to ween everyone off the handouts.

I know why the chancellor and PM have done this. It's a vote winner and aligning themselves with the people's champion ML. It's a good relationship ML boosts his popularity and the Government win votes they are both using each other.

The best we can all hope for now is that predictors such as Cornwall Insights have got their numbers correct for 1st July and 1st October.

Now just so you don't think we are completely heartless we donated the AFP payment that we should not have got to a local warm space and foodbank. We have also donated more food to foodbanks than any other year. We have also introduced rent freezes on the flats we rent out and refunded each flat for the communal lighting that we got £400 for so they got an extra £57 each.

Yeah we do agree its been done for political reasons.

I suppose the issue is with the CoL payments they been used to cover generic cost of living increases such as housing costs, and food bills, then the amount left over isnt enough to cover the increased costs of electric.  One thing I tried to make people on this forum aware of last autumn was that for the poorest people, they were struggling all the way through last summer after the April increase, it wasnt a "winter only" problem.

So consider the following.

The CoL is applied in 2 lump sum's.  (the 3rd isnt until 2024).

The first hasnt been done yet.

Yet living costs still need to be paid.

So first issue is cashflow.

Secondly it works out at around £54 a month.

I live on my own, I am a light energy user, and I can tell you my monthly living costs increases have far exceeded £54.  For people with children this will obviously be even worse.

The current EPG level is still circa 200% the pre crisis unit rate, and the standing charge increases have been atrocious.

Food inflation is through the roof, and housing cost inflation. (sadly not all landlords are as as nice as yourself)

I do think anyone who thinks the CoL payments are actually too high for the poorest people I am sorry to say just dont understand, they in a different bubble.

All these interviews Martin did on TV trying to educate the middle classes that the situation was so bad for the poor, he wasnt exaggerating, he was telling a very true point.  We now have the NHS prescribing heating, heat banks on top of the existing food banks.  I know its a negative post, but sometimes people do need reminding that everything is far from ok, and the current costs of living with EPG accounted for are most definitely way too high.  

Chrysalis

silverwhistle said:

As pointed out borrowing to spend on current expenditure and not on investment is not maintainable longer term. It may be necessary in the short term, but in the longer term we need investment and better benefits for those that need them.

I'm a low user as I was lucky enough to have some savings and invested in solar panels 10 years ago. My car was old and kitchen needed updating but I went for the longer term infrastructure investment. In the new financial year I'm going to review my energy bill and hope to add an additional (to my regular DD) cheque to my local foodbank as my unchanged £20 a month energy direct debit has left me with only a small debt to pay after the 6 month's help.

George Osborne introduced austerity 13 years ago but unfortunately cut investment in schools, hospitals, training, housing and anything that could be ignored for a few years, and the results are now becoming evident in a sub-optimal economy and poor living conditions. Just spending money now to burn fuel to heat old and badly insulated homes cannot continue in the longer term.

Indeed, money needs to be spent in the right way, someone from Germany still jokes about how we have thrown 100 billion down the drain on vanity projects, corruption, tax breaks and so forth.

This was why I said last year, whilst the support is needed to fend off an immediate crisis and potential riots, it was never a long term solution.  But when I tried to push the point we should be investing in new energy infrastructure, there was a lot of negative feedback because as always there is too many people who dont want to spend now for gains in future.  We are very much a anti spend country.   I think we all recognise we cant be spending 100 billion a year subsidising people's energy bills, but the need doesnt just go away because we decide to stop doing it, there needs to be investment to naturally bring those living costs down in the longer term.  Because its also unsustainable to ignore it, the people wont vanish, you will start noticing them begging homeless when walking around shopping centres, and when the economy shrinks with less spending power.

I still remember the 1980s, we had a government who decided to only concentrate on those who were comfortable and thought everything was good because enough voters were ok with it to win an election, but whenever I went to the city centre, there was beggars everywhere, even near where I lived in the subways.

MattMattMattUK

Chrysalis said:

silverwhistle said:

As pointed out borrowing to spend on current expenditure and not on investment is not maintainable longer term. It may be necessary in the short term, but in the longer term we need investment and better benefits for those that need them.

I'm a low user as I was lucky enough to have some savings and invested in solar panels 10 years ago. My car was old and kitchen needed updating but I went for the longer term infrastructure investment. In the new financial year I'm going to review my energy bill and hope to add an additional (to my regular DD) cheque to my local foodbank as my unchanged £20 a month energy direct debit has left me with only a small debt to pay after the 6 month's help.

George Osborne introduced austerity 13 years ago but unfortunately cut investment in schools, hospitals, training, housing and anything that could be ignored for a few years, and the results are now becoming evident in a sub-optimal economy and poor living conditions. Just spending money now to burn fuel to heat old and badly insulated homes cannot continue in the longer term.

Indeed, money needs to be spent in the right way, someone from Germany still jokes about how we have thrown 100 billion down the drain on vanity projects, corruption, tax breaks and so forth.

We do waste money on various things, I will point out though that tax breaks are not throwing away money, everyone gets one form of tax break or another, from the £12k tax free allowance that all but high earners get, to pension tax relief, to VAT zero rating on food, all of those things are tax breaks of one kind or another. A huge difference between us and Germany is how much total tax we collect as well though, in the UK we collect 33.3% of GDP as tax, in Germany they collect 37.5% of GDP as tax, they have a debt of 59.8% of GDP whilst ours is 86.9 and will likely hit 90% in the next year or two. That is on top of our much larger personal debt figures than Germany. The other major issue is that the top third of earners have the fifth highest rate of effective income taxation in the EU, which is comparable to Germany, the bottom two thirds of earners in the UK pay the lowest effective rate of income taxation in the EU. 

Chrysalis said:

This was why I said last year, whilst the support is needed to fend off an immediate crisis and potential riots, it was never a long term solution.  But when I tried to push the point we should be investing in new energy infrastructure, there was a lot of negative feedback because as always there is too many people who dont want to spend now for gains in future.  We are very much a anti spend country. 

We are not necessarily an anti-spend country, we are an anti-paying for it country, many people are happy for the government to spend money which benefits them, but they do not think that they should have to pay taxes to fund that. 

Chrysalis said:
I think we all recognise we cant be spending 100 billion a year subsidising people's energy bills, but the need doesnt just go away because we decide to stop doing it, there needs to be investment to naturally bring those living costs down in the longer term.  Because its also unsustainable to ignore it, the people wont vanish, you will start noticing them begging homeless when walking around shopping centres, and when the economy shrinks with less spending power.

It is not unsustainable to ignore it, it is somewhat unpleasant. However the reality is that nearly everyone is everyone is facing a drop in living standards to a greater or lesser extent and it is not possible to insulate people against it. Begging and homelessness is not usually an economic issue, during lockdown when hostel beds were provided for all there were still rough sleepers and even with free places still available it continues to exist.