Thoughts on Govt. support for home heating fuel?

lohr500

I'm watching and listening to the discussions about the possibility of Govt intervention on heating oil prices with interest.

I do have a concern though that if some form of price cap is applied, and/or if support is given either universally or to specific groups, then this could result in a lack of competition and a higher base price.

A bit like what happened with the cap on University tuition fees where every institution seemed to end up charging the maximum capped amount.

Whilst the current situation is far from ideal and I am convinced there is a lack of transparency on pricing and profiteering taking place, might it be better to let market forces drive the price for the time being?

We are hopefully approaching warmer weather where demand for heating will be less and so the short term financial impact for most customers will be reduced.

Also, do we think the situation in the Middle East will continue for several months, or will market forces prevail and a de-escalation will commence shortly?

My gut feel says that we could end up with some poorly thought through support scheme that takes too long to roll out and ends up causing more long term harm than good.

Then again, I could be completely wrong in my thinking.

Any thoughts?

Grumpy_chap

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Gaberdeen

I can't see them applying a cap like the one that applies to gas and electricity - those caps are based on average pricing data that includes industrial sources to arrive at a "fair" limit to smooth out peaks & troughs

To my knowledge the OFGEM do not track the price of heating oil so would have no data to use to arrive at a similarly "fair" cap.

What I imagine will happen instead will be that the Government will underwrite a % of the cost of heating deliveries per household up to a limit - they will pay this money directly to oil suppliers who will then apply discounts to domestic heating oil customers.

lohr500

https://forums.moneysavingexpert.com/discussion/comment/81924481#Comment_81924481

A very good point and we should avoid a political debate over this.
Hopefully any replies can avoid politics and voice general views on the merits or otherwise of some form of support.

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/comment/81924506#Comment_81924506

Indeed, everything is speculation for now but once there is any announcement about any scheme (or absence of any scheme), then there may be scope for discussion about the mechanics of the implementation, eligibility and such like. The BBC News website today suggests that a Government announcement about any support is likely at some point today.

born_again

Just announced.

PM announces £53m support for vulnerable households relying on heating oilpublished at 10:5310:53

Starmer says his government has brought stability back to public finances. He adds that the UK economy is in a better place today than it was at the start of Russia's full-scale invasion of Ukraine.

Back then, he says, inflation stood at 5% and rising. Now he says it has been brought down to 3%.

The prime minister then outlines five steps his government is taking to tackle the cost of living.

First - he says, energy bills will be capped to the end of June, saving the average household £170. He adds this is in addition to the £150 warm homes discount for the most vulnerable.

Second - the fuel duty cap has been extended until September.

Third - Labour will support rural communities with the cost of heating oil

Fourth - after announcing a £53m support package for the most vulnerable households who rely on heating oil, Starmer adds the UK will be pushing ahead with its long-term plan to build Britain's energy security

Fifth - his government will continue to work towards a swift resolution of conflict in the Middle East. "Ending war is the quickest way to reduce cost of living," he says.

fatbelly

The third and fourth points seem very devoid of detail I have just had 1000 litres delivered on the basis that the situation is likely to get worse and any help the government offer is not likely to come my way If the 53 million wad spread acress all those who use oil ( it won't be) it works out as £38 each

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/comment/81924656#Comment_81924656

According to an article I read earlier in the week, there are approximately 500,000 homes that use heating oil. So, the £53 million would work out at just over £100 per property on average.

Your figure (£38 per property) makes it about 1.4 million properties.

There seems to be very little information thus far to indicate what the eligibility requirements will be for the £53 million to be distributed.

KittenChops

https://forums.moneysavingexpert.com/discussion/comment/81924622#Comment_81924622

Quote from https://www.bbc.co.uk/news/articles/cp9mgpzn901o:

"The government said its support would be "targeted" to help low-income households in rural communities affected by the recent surge in costs."

IgglyBiggly

Over the last 2 weeks, the government have raised an (estimated) extra £60m in VAT on fuel at the pump from the higher fuel prices. Rachael Reeves has mysteriously found £53m to support a small proportion of heating oil customers on low incomes & benefits. This does not help working people or those on fixed pension incomes. It's not supporting all of the 1.5m on heating oil at all, it is supporting a proportion of those on heating oil, as far as I can see. I wonder how many will actually get that support?

fatbelly

There are

500,000 households in N Ireland

744,000 in England/Wales

127500 in Scotland

Who use heating oil. I am guessing here but around 10% of these may see something around £400 from the scheme when details are released.