“Phony Freeze” – Ed Davey calls out Government as bills double from last year

Ed Davey has accused the Conservatives of bringing in a “phony freeze” on energy bills, after it emerged the average family will see their heating costs almost double this winter compared to last year.

Here he is challenging the Prime Minister:

Under the plans set out by Liz Truss today, energy costs will be capped at £2,500 a year for the average home, almost double the £1,277 the cap was set at last October. It is also an increase of over £500 on the current price cap.

Liberal Democrats were the first to call for energy bills to be properly frozen by keeping the current cap in place, funded by a tougher windfall tax on the record profits of oil and gas companies.

Ed said:

This phony freeze will still leave struggling families and pensioners facing impossible choices this winter as energy bills almost double.

Liz Truss and the Conservatives are choosing to allow this huge hike to people’s heating costs, while refusing to properly tax the eye-watering profits of oil and gas companies.

This is a deliberate choice and it is the wrong one. People are furious that once again the Conservatives are on the side of oil and gas giants making record profits rather than families struggling to make ends meet.

The point about a cap being funded at least in part by a windfall tax is an important one. Why should huge energy companies get an unexpected £170 billion bonanza and not have to contribute at all, yet a household on the average wage gets a huge hike in their bills this Winter?

Other things that made me nervous about Liz Truss’s statement are:

Business and public sector support is only guaranteed for six months. How are councils supposed to set their budgets for next year in February?

A review on energy supply regulation worries me. What will this mean for planning and safety around new nuclear power plants?

Other Lib Dems have criticised the Government’s approach:

 

Money saving expert Martin Lewis, who has been absolutely brilliant on this issue produced a briefing, which, to be honest is better than the Government’s own statement, about what the plans will mean:

The Government has also lifted the ban on fracking, which has prompted Wera Hobhouse to demand that they publish a review into the geological impact – more precisely earthquakes.

Wera said:

Ministers must come clean and publish this report immediately. People must not be kept in the dark about the impact that fracking could have on their local community.

Tearing up our precious countryside through dirty fracking is not the answer to the energy crisis. Fracking would involve drilling up thousands of wells and risking earthquakes up and down the country while doing nothing to bring down energy bills.

The Conservatives have spent years failing to invest in renewables and better insulating our homes. The focus now should be on reversing that trend and investing in clean energy, so we can become truly energy independent in the long term.

 

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

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8 Comments

  • Helen Dudden 8th Sep '22 - 2:00pm

    It does come to something when those who make donations to a political party do it for a reason, profit.
    I agree with Wera, nothing has been done that could improve on the subject of energy production.
    When members of parliament have interests in private companies and profit, we can all watch as their interests are served first.

  • George Thomas 8th Sep '22 - 2:09pm

    “Tidal Lagoon Swansea Bay was a proposed tidal lagoon power plant that was to be constructed in Swansea Bay off the south coast of Wales, United Kingdom. Development consent was granted by the UK government in June 2015, and in June 2018 the Welsh Government approved the plan and offered to invest £200 million; however, later that month the UK government withdrew its support on value-for-money grounds. ” (wikipedia)

    Now lets look at all the other things UK Government thought were value-for-money over past 12 years and how much certain projects have been overspent on if there was an identified boost to areas Tories wanted to win seats in…

    At least we get fracking and (interest free) loans to look forward to.

  • Peter Martin 8th Sep '22 - 2:20pm

    We can all agree that the energy companies should pay a windfall tax. However to properly understand economics we should look behind the veil of the money transactions to see what is going on with the availability and transfers of goods and services.

    Are those tax receipts, or the proceeds of increased govt borrowing/currency creation, going to provide any more gas and electricity or are they going to bid up the price of already available electricity and gas in the energy market?

    Methinks that it might be a little bit of the former but it will be a lot of the latter. In which case we need to think again about what we are doing.

  • Last year the energy price cap was £1278 and increased by £693 to £1971 in April. It will now increase to £2500 in October a further £529. The total increase over the year will be £1222. This is more than the support people on benefits could get. If a person lives in a band A to D house for council tax they will have received £150 from the government via their council. A person on benefits are due to receive £670 from the government in two payments this year. Every bill payer will receive £400 energy bills discount. These three amounts equal £1220.

    Hopefully, if our Conference takes place there will be an amendment to F15 the ‘Cutting VAT to Ease the Cost-of-Living Crisis’ policy motion adding to the motion an energy price cap freeze at £1971. Hopefully also it will include an amendment to add an energy price freeze for non-domestic customers.

  • Jenny Barnes 9th Sep '22 - 10:44am

    Short term there’s hardly any more gas available. There isn’t enough gas for the demand and becsuse demand is fairly inelastic – large parts of the economy just don’t work without energy – the price rises a lot to match demand and supply. Now if you cap the price to the consumer, you either have to pay the difference ( and notice that now the demand becomes even more inelastic ) or you have to introduce rationing. High prices are effectively rationing by price.
    Short term there’s not much can be sensibly done. Medium term – a programme of insulation for homes and upgrade new building insulation standards would be good. Wind and solar can help – but the problem with these is intermittent supply both seasonal and daily, and something has to balance that out, whether it’s short term demand cuts or firing up your gas generators. Longer term – nukes. We need a fleet of around a dozen or more if we’re going to have any chance of net zero, electric cars , heat pumps etc. Wind and solar may be cheaper, but even free is no good when you’re freezing in the dark of a 3 week anticyclonic gloom in the winter.

  • Jenny Barnes – Short term there’s hardly any more gas available.
    and long-term there’s hardly any oil or gas available.

    Recently came across a report from an oil industry analyst who said our (known) fossil fuel reserves are only sufficient to supply fuel at 2019 (ie. pre CoVid19) levels for 50~60 years. Which given in the 1970’s it was determined we had circa 200 years at 1970’s consumption levels, seems about right. However, given the head-in-the-sand mentality we’ve been witnessing about the perfect storm and the desire of governments to “grow their economies” ie. consume more fossil fuel, we can reasonably expect that 50+ years to be 30+ years in reality and that’s before we factor in climate change etc. and so much of that actually needs to remain in the ground…

    Sobering, to think that for the majority of those approaching retirement, will be around to see the end of the fossil fuel age…

  • Martin Lewis pt. 15: “…can switch to the new state subsidised tariffs..”

    Am I just being cynical, but this seems to imply people in general (ie. not necessarily on fixed tariffs) may be required to switch to government capped tarifs and contracts…

    Remember the cap only applies to what the consumer pays directly, there is no real cap on what the energy companies can draw down from government to cover the difference between the increasing prices they pay in the world market. I expect the energy companies to exhaust the current allocation of monies well within 2 years, as they “struggle” to maintain executive bonus’es and dividends to their foreign owners.

  • Jenny Barnes 12th Sep '22 - 9:37am

    roland “fossil fuel reserves are only sufficient to supply fuel at 2019 (ie. pre CoVid19) levels for 50~60 years.”
    Yes. And as energy demand is doubling every 35 years, while renewables are still only taking a very small fraction of that demand, you can reckon that fossil energy will be over in less than 30 years. An important concept is Energy returned on energy input (EROEI for short). As we have used the easy big gas, oil & coal fields, what remains is smaller and more difficult. Think deep water oil wells or tar sands compared with sticking a pipe in the ground at the beginning of the oil age. So more energy has to be
    used to get usable energy out. When the ration reaches 1 to 1, there is effectively no more energy to be had. It would be good if we learnt to live on a gradually declining energy demand, but until the billionaires give up their private jets and space toys, it’s not going to happen. Sigh.

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