It’s time for action to cut energy bills

 In Speeches

This article was first published in, Southern Front and Speaker’s Chair on 10th December 2013 and can be found here.

Warm words won’t stop people shivering this winter. Millions face real financial hardship as a result of sky-rocketing prices, yet the government doesn’t have a plan. As usual it’s hard-working families and older people who are being hit hardest. Ed Miliband’s promise to freeze energy prices will help, but there’s a longer-term need to restructure the energy market and switch to more co-operative forms of energy generation and use, that are environmentally sustainable as well as costing people less.

Many people on lower incomes depend on pre-payment meters, while homes dating from before the 1930s are difficult to insulate because they were built before cavity walls were a requirement.  When you combine rising fuel bills with the high cost of housing, and rising train, bus and tube fares, the result is a big squeeze on the disposable incomes of hard-working people. Despite the unfairness of soaring energy prices, most people feel powerless to act. What option have you got when the marketplace is dominated by the ‘Big Six’ energy companies who are quick to raise prices when wholesale costs go up, but rarely cut prices when costs go down?

It’s time to hand more power to the people. We need active citizens with power to make decisions about their own lives, rather than passive onlookers who are forced to pay more and more to heat their homes. National and local government must take a lead in giving people the power to change things. Why? Because empowering consumers will deliver greater fairness.

Here’s how we can do that on energy prices: first, it’s time for the energy regulator OFGEM to end the unfairness of the poorest paying higher energy tariffs than the rich. Why should a millionaire in a mansion pay a lower tariff than a hard-pressed family on an estate? One of the starkest examples is pre-payment meters. Around six million people in the UK use meters. Many of these are among those on the lowest incomes. Most are unable to switch accounts or take advantage of deals to save money, including direct debit and fixed-rate contracts. The meters cost substantially more than the standard tariffs offered by energy companies. So the poorest end up paying hundreds of pounds more every year than those on higher incomes. This is unfair and should be put right by a regulator on the side of consumers.

Second, it’s time to end rip-off energy exit fees. Millions of people face charges of up to £100 in ‘exit fees’ just because they want to switch their account to a lower tariff. This is anti-competitive and contradicts the government’s advice to customers that switching accounts will save them money. The government must change the law to make switching energy tariffs free. Why should those who act on the advice of government and consumer groups and switch accounts be penalised, just because they want cheaper fuel bills?

Third, it’s time to get serious about insulation. Millions of homes still don’t have loft insulation or cavity wall insulation. The government’s Green Deal scheme was launched last year to give people the chance to insulate their homes. Yet interest rates on the Green Deal loans can be as much as 7.5 percent. This has led to real fears that consumers will end up paying twice the real cost of their home improvements. To make the Green Deal work better, ministers must ensure finance is provided at an affordable rate. That way, consumers will get greater power to make decisions about how and when to insulate their homes.

Finally we need to encourage more energy generating and purchasing co-operatives to start up, to provide competition for the Big Six. In 2011, residents in Brixton set up Brixton Energy Solar 1, the UK’s first inner-city, co-operatively owned energy project on a housing estate, with support from their Labour council which I was leading at the time.

A solar power station was installed on the roof of a housing block on the Loughborough Estate.  Given the pressure on council budgets it was paid for by public subscription, guaranteeing a three percent annual return for investors – which is much better than most savings accounts at the moment. Residents on the estate benefit from lower bills, as the project sells energy to the National Grid and generates cheap energy for residents to use. It’s been a huge success and is now being extended to other housing estates in the area.

To work effectively, solar power generators need to be set up on big buildings with open space for a large number of panels to face the direction of the sun. This is often more feasible on public buildings like schools, town halls or housing blocks than on individual houses. By persuading public authorities to cooperate with schemes like these, local communities can benefit from lower bills and more sustainable sources of energy.

In the United States, 42 million citizens are members of energy co-operatives. We need more support from government at every level to develop initiatives like this across the UK. Local energy co-operatives need support to navigate complex planning rules, manage their finances and develop their businesses. Local authorities and other big users of energy should explore how they can work together to purchase energy cooperatively and make savings which can be reinvested into services or to help those facing financial hardship.

On a smaller scale, Lambeth’s Community Green Champions scheme brings people together in their own neighbourhoods to bulk-buy insulation materials at lower cost, to help make their homes more energy-efficient. Draught proofing and secondary double-glazing can both be provided inexpensively and save more in energy than they cost to buy within a short period of time. Communities that have taken part quickly develop a stronger sense of community, that often leads them to tackle other local problems, such as cleaning up grot-spots, setting up a neighbourhood watch scheme or bulk-buying basic food at wholesale prices.

We can’t allow fuel prices to continue spiralling out of control. Hard-working people are seeing their incomes fall while the cost of living continues to rise. Fuel poverty is a reality in our communities, but it is not inevitable. We can tackle it by putting real power into the hands of people and bringing communities together to build a fairer country from the bottom up.