How the energy crisis should be tackled as heating bills soar – Anne McIntosh

ALL those currently caught in fuel poverty are those who live on the lowest incomes – National Energy Action estimates that four million households already live in fuel poverty, and that was before the energy increases in October last year.
What can be done to alleviate the fuel crisis? Tory peer Anne McIntosh led a House of Lords debate.What can be done to alleviate the fuel crisis? Tory peer Anne McIntosh led a House of Lords debate.
What can be done to alleviate the fuel crisis? Tory peer Anne McIntosh led a House of Lords debate.

It is estimated that those increases have put a further 500,000 households into fuel poverty. Moreover, a further 1.5 million people could be forced into fuel poverty when the price cap is removed in April if the rises are as bad as is feared. We also know that taxation will increase from April.

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What is the background to this debate? Wholesale energy prices recorded a record increase in the run-up to December last year, reaching an all-time high and about nine times higher than the year before.

Tory peer Anne McIntosh - the former Thirsk and Malton MP - led a House of Lords debate on the energy crisis.Tory peer Anne McIntosh - the former Thirsk and Malton MP - led a House of Lords debate on the energy crisis.
Tory peer Anne McIntosh - the former Thirsk and Malton MP - led a House of Lords debate on the energy crisis.

Crucially, there is a lack of energy storage in the UK; I understand that we have on average only 60 days of gas storage as opposed to three months in Germany and other European countries.

We in the UK import 50 per cent of our gas, so we are extremely sensitive to price rises on the global gas market. Around 85 per cent of UK homes use gas central heating. The cap on energy prices is being lifted on April 1, 2022. I understand that there is breaking news that the Government are intending to take action well before the April deadline and await details.

Currently, 25 per cent of household electricity bills will fund renewable energy costs, yet energy generation should rightly be funded either out of general taxation or, perhaps more appropriately, by raising capital in the market in the normal way.

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What is unacceptable is that, to date, the price of energy has increased for domestic consumers by £235 since the previous October. That is compounded by the fact that the cost of energy company failures impacts on consumers too.

What can be done to alleviate the fuel crisis? Tory peer Anne McIntosh led a House of Lords debate.What can be done to alleviate the fuel crisis? Tory peer Anne McIntosh led a House of Lords debate.
What can be done to alleviate the fuel crisis? Tory peer Anne McIntosh led a House of Lords debate.

Since August 2021, 26 energy suppliers have gone out of business. Ofgem estimates that UK households will have to pay between £80 and £85 extra on their energy bills in 2022-23 as a result of these recent energy supplier failures.

What action would I like the Government to take? I welcome the fact that current schemes, such as the Warm Home Discount and energy company obligations, help in so far as they do. They offer a lifeline targeted at reducing energy costs, especially for those on low incomes and vulnerable households.

These schemes could be increased in value and their focus could be extended. That is probably the easiest option and one bringing the best and swiftest results to the fuel poor. National Energy Action is also looking to pioneer a new social tariff, which I imagine would operate in a similar way to the water sector. It seems incredible that there is no social tariff as yet in the energy sector, and I urge the Government to look favourably on these proposals.

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Equally, the Government could suspend green levies on energy and electricity bills, and I urge them to do so. They are currently used to fund renewable obligations and feed-in tariffs. In my view, in my view, it is inappropriate to ask those living in fuel poverty to pay for the next generation of renewable energy.

What can be done to alleviate the fuel crisis? Tory peer Anne McIntosh led a House of Lords debate.What can be done to alleviate the fuel crisis? Tory peer Anne McIntosh led a House of Lords debate.
What can be done to alleviate the fuel crisis? Tory peer Anne McIntosh led a House of Lords debate.

It would be more appropriate for energy companies to raise the money for infrastructure costs from the market as other utilities have to do, raising finance in the same way as do water and telecommunication companies. I therefore urge the Government to lift, either temporarily or permanently, green levies on domestic energy bills.

I also propose that the Government consider either a short-term reduction or suspension of VAT on fuel. This would be a Brexit dividend that we have been told we can benefit from, as we were unable to do so previously. However, as we have now left the European Union, we could now do so. This would save households between £90 and £150 on their domestic bills.

I would also look to restructure the market. Every time an energy company fails, it should not be for consumers to pick up the sizeable cost; it should be borne by the market. I also urge the Government to expand winter fuel payments to those 65 or under who qualify for cold weather payments – an easily identifiable group.

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I personally oppose fracking, which is neither cost effective nor environmentally sustainable. However, a better option would be to boost energy from waste, particularly where this is done so effectively, such as in North Yorkshire at the Allerton waste facility. I urge that the energy created is put into the local grid, helping those living in areas of low temperatures and often high fuel poverty.

Baroness McIntosh of Pickering is a Tory peer who led a Lords debate on energy. This is an edited version.

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