Ed Davey writes… Lower energy bills – with good deal for the fuel poor, green energy and the green deal

Energy-bills-006Energy bills are a hot political topic. Since 2005, energy bills have almost doubled at a time when many people’s incomes have barely risen. The cause of these rises has been almost entirely rising wholesale gas prices on international markets. Yet despite that and even though the cost of government policies only represents 9% on the average bill, it is right the Government has closely scrutinised our policy costs, and found a way to reduce them, to deliver an average saving of £50.

The fact we have done so whilst protecting the fuel poor and maintaining our support levels for green energy will infuriate some on the right. Since Ed Miliband’s irresponsible call for an energy bill freeze, a rabid right wing mixture of climate change deniers and vested interests had seen an opportunity to undermine our policies to tackle climate change and to help the fuel poor. Which is why I have been very clear throughout the review – that will not happen on my watch.

The package that I have announced today meets that pledge. The support for green energy that we pay for through bills is untouched. This is an important message for investors as we continue to roll out our green energy programme and create green jobs. Through a redesign of some of our energy policies we have been able to ensure that households will see their bills drop by an average of £50 a year whilst maintaining our spend on the fuel poor and extending that support for a further two years from 2015 to 2017.

Whilst we have cut by a third the non fuel poor part of the Energy Company Obligation – which supports carbon emissions reduction – we have secured agreement that it should continue at this level for a further two years AND that it will then revert back to its previous level till at least 2022. Of course, we would have liked to have done more to help the fuel poor and boost energy efficiency, but this is a coalition government.

To ensure the package as a whole is nonetheless carbon neutral in its effects we have secured over half a billion pounds of additional support over the next three years for energy efficiency schemes, focused primarily as a boost for the Green Deal. As outlined by Nick and the Prime Minister in the Sun yesterday that support will involve:

  • A stamp duty rebate worth up to £1000 to spend on important energy saving measures – equivalent to half the stamp duty on the average house-or up to £4000 for particularly expensive measures such as solid wall insulation. And all home buyers not just those who have paid stamp duty will be able to benefit, to make sure lower income homeowners benefit too.
  • A new scheme to back our plans to improve energy efficiency for private sector tenants, by incentivising landlords to meet the proposed minimum standard of an EPC rating of E from 2018
  • Increased funding to help increase the energy efficiency of public sector buildings such as hospitals and schools.

But our stamp duty rebate and rented sector incentives will boost demand for the Green Deal, and sit alongside new reforms I have announced for the scheme, to streamline it for consumers and providers alike. By both reforming and turbo-charging the Green Deal, our plans for a vibrant energy efficiency market will come back on track.

And there will be no reduction in our support for low carbon energy investment, despite what some Tories might have wanted.

Once again, Liberal Democrats in government have secured a result that’s progressive, helps hard pressed households with their living costs and ensures that we do not give up on our efforts to tackle climate change.

* Ed Davey is the MP for Kingston and Surbiton and Lib Dem Home Affairs spokesperson.

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29 Comments

  • David Allen 2nd Dec '13 - 12:53pm

    Ed Miliband is right. It’s mostly smoke and mirrors. The same can of course be said for Miliband’s own policy, which bears a marked resemblance to King Canute’s.

    I am inclined to give Ed Davey some credit for minimising the harm done to our (inadequate) efforts to tackle climate change. But why can’t we be honest with the public? Their bills have gone up basically because international fuel prices have gone up. End of story.

    Unless and until the tide turns, there is not very much we can do about it. And, sitting on a chair halfway down the beach is probably the worst thing to do, Mr Miliband!

  • Bill le Breton 2nd Dec '13 - 1:01pm

    We must be careful to ensure that those on ‘fixes’ also benefit. Could see that becoming an issue. Would be interesting to know what proportion of people are on fixes.

  • As David Allen says, Davey has made the best of a bad job. But it still feels like we have dropped our trousers for the Tories once again, and no doubt will look like that to the 25% of the electorate who say they would consider voting for us.

  • This is tackling the wrong problem. Fuel bill in this country *aren’t* too high; if anything they’re too low. We need to be investing in efficiency to reduce fuel bills and taking steps to tackle income inequality so that we’re not left with the lower end of the distribution struggling to pay – something, of course, that the coalitions policies on welfare is busy making much worse.

  • “David, smoke, mirrors, and £50. “

    Can any else work out where that £50 is coming from?

  • The truth is that ECO is a mess. It’s not working well enough. Slowing it down gives a chance to put things right. Hopefully Ed Davey will listen to the people pointing out the problems. The idea of a rebate against stamp duty is a good one. It will draw attention to the EPC and improvement measures during the sales process.
    There are not enough suppliers able to install solid wall insulation which is why the measure has fallen flat.
    I share with David Allen the picture of Ed M. as King Kanute. Except that Kanute made the statement about the tides to show up sycophantic advisers, while Ed M. himself seems to think he can hold back increases in the international wholesale energy markets.

  • http://www.uswitch.com/gas-electricity/guides/gas-electricity-prices/

    I just want to point out that, since the last GE the pace of increases has doubled
    2005 – Spring 2010 a aprox 35% increase in price… 5 years

    Late 2010 – 2013 aprox 39% increase in price… 3 years

    No offense but the government and Mr Davey need to step into the real world, and getting the Lib Dem minister to announce this associates the whole problem with the Lib Dem (smoke and mirrors indeed).
    The measures taken mean absolutely nothing in the real world; instead of a 9% rise it will be 6% eventually, probably after the winter weather…
    Instead of an investigation we get a bribe?
    Nice one

  • They’re not lower energy bills. They are energy bills that have not gone up quite as much. Categorically different.

  • @ David Allen

    “Their bills have gone up basically because international fuel prices have gone up. End of story.”

    End of story? If only that were the case. Unfortunately with Miliband determined to make political capital out of it by pretending it is the government’s fault that bills are going up, they have been compelled to be seen to be doing something.

    @ Will Mann
    “As David Allen says, Davey has made the best of a bad job. But it still feels like we have dropped our trousers for the Tories once again, and no doubt will look like that to the 25% of the electorate who say they would consider voting for us.”

    OK, so what would you have done? Nothing, and let the Tories paint us as being in favour of higher energy bills, while Miliband’s party tramples us even deeper into the dirt in the opinion polls? Great solution that would be.

    This is all about the consequences of an utterly irresponsible opposition, determined to make political capital at the expense of long term policies on a host of areas, particularly transport and energy. Sadly, voters are prepared to support a Labour party that offers that kind of opportunistic, cynical stance.

    There’s no point in pretending that we have an electorate that understands these things as they really are, because they clearly believe only what is the most convenient thing to believe at any given time.

  • Joe Otten: would £60 have made it better than the best policy ever? That’s fatuous.

    Ed Davey: you’ve reduced the harm that the Tories would have produced on their own but it’s still a complex dog’s breakfast with no contribution from the energy companies. Very few people will see a £50 reduction, many will go through four or five months paying at the higher rates announced last month. All in all it’s not a reduction at all, but a lesser increase.

    As I type, I hear Ed Davey yet again proclaim how good it is that the energy companies will try to keep prices level for a year or so unless their costs go up, in which case the prices will rise. Feeble!

  • Tubby Isaacs 2nd Dec '13 - 4:31pm

    “A stamp duty rebate worth up to £1000 to spend on important energy saving measures – equivalent to half the stamp duty on the average house-or up to £4000 for particularly expensive measures such as solid wall insulation. And all home buyers not just those who have paid stamp duty will be able to benefit, to make sure lower income homeowners benefit too”

    This is supposed to be some sort of concession you’ve won from the Tories? Why are people buying houses felt to be in need? That could be one of their own policies.

    “whilst maintaining our spend on the fuel poor and extending that support for a further two years from 2015 to 2017”

    Talk of spending commitments beyond the next election mean nothing at all.

    There are some good economic figures out today, better than Labour would have expected and indeed better than the OBR would have predicted. Yet here you are managing to look ridiculous.

  • jenny barnes 2nd Dec '13 - 5:05pm

    Last I heard the “Green Deal” had actually achieved 219 property improvements. So a big improvement would take it to – what – 400? Assuming that of the 20million or so dwellings in the UK, maybe 2 million need insulation, we’ll be 5,000 years fixing them. Markets don’t always work. This is clearly a case for using taxpayer funding to just insulate every house that needs it.

  • Eddie Sammon 2nd Dec '13 - 5:27pm

    I just think increasing energy bills through green levies stinks of middle and upper class snobbery. We should not be banging the drum for these. If we have them they should be paid for by the rich.

  • Stuart Mitchell 2nd Dec '13 - 5:32pm

    Ed Davey: “The cause of these rises has been almost entirely rising wholesale gas prices on international markets.”
    David Allen: “Their bills have gone up basically because international fuel prices have gone up.”

    That particular claim was blown out of the water by Ofgem and even some of the energy companies themselves at October’s meeting of the Energy and Climate Change Committee. Note the graph a short way down this page :-

    http://www.bbc.co.uk/news/business-24730122

    Smoke and mirrors indeed. I do wonder what exactly the point is of these committees getting together and poring over the evidence, when the energy secretary himself is happy to take no notice and mislead the public just a few weeks later.

  • The Tories really are full of S***. Normally they are so preachy about the supposed virtues of markets. They would be enraged if Labour had proposed this taxpayer-funded subsidy. Yet, when their own opinion poll rating is threatened all principles fly out of the window. Anyone would be excused for thinking they were never really principles in the first place but just a way of putting lipstick on the Tory porker. Oh, wait …

    As David Allen says, I’m sure Ed Davey did his best to minimise the harm but he was sounding deeply unimpressive on ‘Today’ this morning. Come on. This plan has been cooking up for days; was that the best Lib Dem Towers could come up with?

  • @Stuart Mitchell
    I guess that’s why Ed has used 2005 as a datum point. From what I have seen there is a less marked upward trend since 2011.

  • Julian Dean 2nd Dec '13 - 5:57pm

    £50 is enough for each household to put at least one loaf of bread per week on the table.

    All we need now is some fish and the second coming.

  • Eddie Sammon 2nd Dec '13 - 6:01pm

    The Lib Dem message should definitely be “get the rich to pay for green policies”. The energy companies do not constitute the rich because this hurts small to medium sized enterprises inside and outside the energy sector.

    A step in the right direction from Davey and Clegg.

  • Am I the only person to whome this just sounds like us saying to the energy companies ‘because you are doing so well at making huge profits by charging high prices we are going to tax you less’. Yes ECO is a mess and more needs to be done to get it back on track, yes the situation of fuel poverty is dire and yes the energy companies need to be able to raise money to invest, but still this is just daylight robbery by the big six energy companies as far as I can see.

    The only sollution I can see is to get more people out of the hands of the oligopalists and point them in the direction of the not-for-profit firms like good energy, ecotricity and equipower, who are doing a much better job of both investing in our energy future AND being fair to their customers.

  • Definitely smoke and mirrors combined with a good measure of snake oil being used here.

    “Yet despite that and even though the cost of government policies only represents 9% on the average bill”
    The government take from the typical dual fuel energy bill is circa 13% – Ed Davey omits the 5% VAT…

    “Government has closely scrutinised our policy costs, and found a way to reduce them, to deliver an average saving of £50.” But then goes on to list a whole series of measures that effectively increase our energy bills, starting with that £50 which effectively will now be paid from general taxation (£500m pa)as will all the other measures such as the stamp duty rebate…

    Also, a concern is that given how poor current building regulations are with respect to energy efficiency, even the purchaser of a newly built house would able to justify getting a £1000 stamp duty rebate, so effectively this is yet another bribe/subsidy to the construction industry.

  • jedibeeftrix 2nd Dec '13 - 9:32pm

    How about you just lower Stamp Duty, and let me decide where to spend my ‘rebate’, thank you very much!

    “A stamp duty rebate worth up to £1000 to spend on important energy saving measures – equivalent to half the stamp duty on the average house-or up to £4000 for particularly expensive measures such as solid wall insulation.”

  • @Jedibeeftrix – Won’t run, this way the politicians can claim a double whammy: helping ‘hard up’ house buyers and the energy efficiency industry.

    Suspect that many will just use the rebate to replace the boiler. And as for a new home, well these can be improved by additional floor insulation (carpets and underlay) and window/door insulation (lined curtains/thermal blinds). As for new homes, the best use of the rebate will be to do a full thermal survey and then get the builder/NHBC to put right the defects.

  • Interesting stuff from Mr Davey but ultimately this seems to me to be a problem of insufficient supply.

    With more supply (perhaps from new govt nuclear), we could actually see prices falling

  • This is not just ‘smoke and mirrors’. It is a dog’s dinner of diversion and a distraction. It is a dereliction of duty.

    Davey’s dog’s dinner is designed to divert attention from the real debate, and Miliband and the Labour Front Bench are happy to conspire in that.

    I saw only one sensible contribution to the whole ‘ debate ‘ in the Commons yesterday – and that was from backbench MP Paul Flynn.

    Paul Flynn wrote this in June of this year –

    Ed Davey is the man who, in June 2006, in a document called ‘WHERE WILL BLAIR HIDE HIS NUCLEAR TAX BOMBSHELL?‘ DECLARED nuclear power to be unaffordable and unnecessary. He predicted that the Labour Government would attempt to hide the true cost of nuclear power by introducing some form of guaranteed market or price, through super-long term contracts. Little did we know at the time at this is what the Liberal Democrats would actually implement themselves in Government.

    Read the full June piece from this Labour MP at –
    http://paulflynnmp.typepad.com/my_weblog/2013/06/lib-dems-fleece-taxpayers-again.html

  • Stuart Mitchell 3rd Dec '13 - 1:25pm

    @Steve Way
    It doesn’t matter what datum point you select – Davey’s claim is bogus.

    See pages 9-12 here :-

    http://www.parliament.uk/briefing-papers/sn04153.pdf

    The Committee on Climate Change estimated that wholesale costs were responsible for just 60% or so of the increase in prices between Feb 2004 and Jan 2011. Since then, wholesale prices have barely changed at all while retail prices have continued to rise sharply. For Ed Davey to claim that rising bills have been due “almost entirely” to increasing wholesale prices shows he is either dishonest or remarkably poorly informed.

    In fact, with Ofgem estimating that wholesale fuel costs make up 44% of the typical dual fuel bill (as of October 2013), you don’t have to be a mathematical genius to work out that for Ed Davey’s claim to be true, wholesale prices would have had to be around ZERO back in 2005!

  • If memory serves, Mr. Davey stated publicly on BBC radio earlier in the year that he was confident the “great opportunity” of Green Deal finance would be taken up by at least 10,000 families.
    In reality, fewer than 100 new boilers were installed using the scheme and the whole exercise has proven to be a disaster.
    Countless small companies invested thousands of pounds only to lose the money in a pointless exercise, and the industry as a whole has suffered massively because of this epic fail.
    Mr. Davey had proven not only to fail about understanding business, he also failed abysmally as a a leader for his department.

    He should do the honorable thing and resign.

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