Douglas Carswell: Frozen out from cheaper bills by folly over energy policy

GOVERNMENT energy policy, put in place by Ministers of all three established parties, is pricing people out of being able to heat their own homes.

The cosy consensus over energy policy here in Westminster is squeezing living standards across the country. According to the index of domestic fuel and light prices, helpfully reproduced by the House of Commons Library, prices have changed fairly dramatically over the past 40 years.

From the early 1980s through to the early noughties, there was a slow, gradual fall in prices; it was a 20-year period of customers getting what they tend to get in a free market, capitalist economy – more for less.

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Suddenly and dramatically, that picture changed in the early noughties. Since then we have seen a rapid rise in prices – sharper, indeed, than that experienced during either of the two oil shocks of the 1970s.

Dual-fuel household energy bills in 2014 for the average home are forecast to be almost £1,400. That represents a real-terms price increase of over 50 per cent in a decade during which average household incomes stagnated.

Why have energy prices gone up so rapidly? Is it because there is not enough of the stuff? Are we perhaps running out of gas?

Not at all: wholesale energy costs have actually been falling as a proportion of the total. According to Ofgem, for every £1 we pay on domestic fuel bills, only about 44p goes to meet the wholesale price.

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Energy prices are not going up because of a shortage of energy or because of beastly energy companies; public policy is driving up the cost of household energy bills. The renewable obligation requires energy companies to increase the proportion of energy they generate from supposedly renewable sources.

That basically means that we have to pay more in order to subsidise the construction of wind turbines.

According to data that the Department for Energy and Climate Change recently put out following a Freedom of Information request, low-carbon policies will result in a 50 per cent increase in energy costs for small business in the central fossil fuel price scenario for 2020.

In the low fossil fuel price scenario for 2020, low-carbon policies will cause a 77 per cent increase for medium-sized companies, which would rise to 114 per cent by 2030. Whitehall officials have gambled on the price and cost of fossil fuel and have got it spectacularly wrong.

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For a number of reasons – not least because of technology and innovation in the United States and the shale gas revolution – the cost of fossil fuel is being driven down. Unfortunately, we have a Government whose officials banked on the cost of fossil fuels being relatively high, so we are now locked into a position where people will have to pay higher costs for years, despite the potential for a great reduction.

It is extraordinary that a Government which once pretended to believe in the free market is presiding over that. We should be benefiting from the lower oil costs, but we are unable to because we are committed to price-fixing.

There are things on which it is good to spend public money, and securing the future of something like Stonehenge is wonderful, but one of the downsides of subsidising windmills is that they damage the countryside. It is not good conservation practice to industrialise the countryside. It is not good for the environment or our heritage sites. It is not good, either, for people who are deliberately being priced out of being able to heat their home. Why? Because an out-of-touch elite in Westminster and Whitehall believes that will somehow save the planet from excess carbon dioxide emissions.

It is the Alice in Wonderland world of SW1. Ministers are competing to be the mad 
hatter, but it is a ridiculous state of affairs.

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The Climate Change Act 2008 was a mistake. I should have listened far more carefully to the late, great Eric Forth MP and voted against it. My failure to do so is my biggest regret as a Member of Parliament. My new party looks to help me to right that wrong, or rather I look to help it to right that wrong.

If we had an honest energy market in this country, suppliers would compete to supply householders with energy at a price that they were willing to pay. There would be no requirements on them to produce a particular mix or quota of energy. Innovation and competition would mean giving customers more for less. Capital and technology would come together to satisfy customers. Instead, we have a system in which lobbyists and quotas meet in Government Departments in pursuit of renewable targets.

It is a corporatist racket, not an energy policy that is remotely competitive or free.

Coal, gas, fracking, nuclear – who knows what mix we might get if we had innovation, capital and a free, honest market in energy?

Douglas Carswell is a Ukip MP who spoke in a Commons debate on energy policy. This is an edited version.