Nick Clegg: “Many will save £100 a year thanks to energy deal”

Liberal Democrat leader and Deputy Prime Minister Nick Clegg has just been on BBC Breakfast talking about the deal that the Government has reached with energy companies which will save many households £100 a year on their bills. Under the plan, consumers would be written to annually and told if a different tariff would save them money.

Nick explained that seven out of ten households were paying too much because they were on the wrong tariff and this idea would save them money. He acknowledged that this alone would not solve all the problems in the energy market but he said that the Government had already introduced the Warm Home Discount for the most vulnerable pensioners and the Green Deal which will encourage proper insulation to reduce overall energy consumption. He pointed out how we all, families, households and businesses alike, need to be more aware of the energy we use.

He also mentioned other ideas the Government was considering to encourage people to switch energy providers, including collective switching, where an intermediary would negotiate on behalf of a large group of people with the energy companies to get the best deal. He acknowledged that the current system, with over 120 tariffs, was incredibly complex and confusing.

Nick was asked about the huge bonus awarded to the boss of Centrica at the same time was it was imposing huge rises in energy prices for ordinary people and he highlighted another Government initiative to give shareholders more clout on those matters.

I thought that he was very clear on a number of initiatives that the Government was taking to help out ordinary people with fuel costs. Where I think he could have improved was to take more credit for the Liberal Democrats. It’s our party which has taken the initiative on most if not all of the ideas outlined above, and I feel that he should be shouting that from the rooftops rather than leaving others to do it for him. These ideas have been brought to reality by Liberal Democrat ministers – Chris Huhne and his successor Ed Davey at the Department of Energy and Climate Change and Vince Cable at Business, Innovation and Skills. If we don’t speak up about our achievements, about the added value the Liberal Democrats bring to the Government, nobody else will.

* Caron Lindsay is Editor of Liberal Democrat Voice and blogs at Caron's Musings

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  • Stuart Mitchell 11th Apr '12 - 10:17am

    If the energy companies are suddenly faced with a deluge of customers switching to the best deals, it’s quite obvious that they will simply push up ALL prices to preserve their profits. I wonder if that £100 saving quoted takes account of that.

    Changing providers is no answer because the common perception (built on years of coordinated price rises) is that they operate as a cartel.

    So I think the benefits of this policy are illusory. However, turning the whole thing on its head, I actually don’t have too much a problem with high energy prices; it is right that the prices reflect the high externalities associated with inefficient energy use (though I’d be happier if the utilities were still nationalised). The major problem for me is that we have a situation where the best deals are being had by consumers who are predominantly young and internet-savvy, while those who need cheaper energy the most (i.e. the elderly) are likely to have the worst deals. This new scheme may improve that situation a very tiny amount but I stress the word “tiny”.

  • John Richardson 11th Apr '12 - 10:45am

    The per customer profit for energy retailers is only a small fraction of £100 per year. So it’s pretty obvious there isn’t anything like sufficient leeway in the system to cut everybody’s energy bills by £100 just by squeezing the energy companies. The price of the cheaper tariffs will have to be increased to compensate.

    We can demonise energy companies all we want but it will do no good as they are not the root of the problem. The fact is that due to the competitive energy market here we have amongst the cheapest gas and electricity in Europe but, thanks to government inaction, amongst the worst efficiency in housing and heating systems. Fix that!

  • >”Under the plan, consumers would be written to annually and told if a different tariff would save them money.”
    A scheme similar to this has been operated by various telco’s for several years. I would be interested in seeing the results from this to see just how many customers actually switched and saved money as a result of the change contact/tariff notice.

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