Philip Webster, Political Editor and Robin Pagnamenta
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Gordon Brown faces a double revolt despite announcing a £1 billion package yesterday to help struggling households to cope with soaring energy prices.
The Prime Minister said that energy companies and generators had agreed to stump up £910 million to pay for all low-income and pensioner families to get free loft and cavity insulation, with six million others offered half-price deals. The measures were a “better alternative” to a windfall tax.
Families could save up to £400 a year from the help offered, ministers said. Mr Brown confirmed that the payments from the companies would be authorised by legislation to be introduced into the Commons shortly, insisting that he did not expect the cost to be passed on to the consumer.
That aspiration was immediately called into question when industry figures suggested that part of the bill always ended up with the customer.
One expert said that Britain’s middle classes would be forced to pay for the lion’s share of the funding package. Dieter Helm, Professor of Energy Policy at New College, Oxford, and a former Downing Street adviser, said that it was “completely naive” to believe that the money raised for the scheme from the Big Six power companies would not be passed on to consumers in the form of higher bills.
The announcement of a Bill was seized upon by MPs and pressure groups as meaning that Labour MPs would be able to table amendments calling for a windfall tax. The unions have also flagged such a tax as their priority for a debate at the Labour conference the week after next.
Mr Brown could be defeated at the conference but would be unlikely to lose in the Commons because the Conservatives would not back a windfall tax. Even so, the tax might be seen as a threat to the companies if they were found in any way to have passed on the cost of the scheme to consumers.
Mr Brown and John Hutton, the Business Secretary, also promised action against the companies if a current Ofgem inquiry into their pricing practices found unacceptable behaviour.
The package includes:
- Free cavity wall and loft insulation for six million pensioners and poor households
- 50 per cent off the cost of insulation for another six million households
- A freeze on this year’s bills for half a million poor consumers
- Cold weather payments to go up from £8.50 a week to £25 for pensioners, the disabled and families with children under 5 if temperatures drop below zero for seven consecutive days
The Government says that its aim is to insulate every home in Britain by 2020, and energy companies, councils and voluntary organisations will be making door-to-door visits in deprived areas to promote the scheme.
Mr Brown stressed that the moves were focused on reducing energy consumption. “Our objective is nothing less than a sea-change in energy efficiency and consumption, at the same time as helping the most vulnerable households this winter,” he told a Downing Street press conference.
The Prime Minister said: “We want to keep energy bills as low as possible and I do not expect the £910 million that we raise to be passed on to the consumer by the energy companies.”
That appeared to be contradicted by the Association of Electricity Producers, whose chief executive, David Porter, said: “Whenever people impose costs on an industry, the bill to some extent always ends up with the customer.”
Tony Woodley, joint leader of the Unite union, said that the moves were not enough and he would make the issue a central theme of the Labour conference. Alan Duncan, the Shadow Business Secretary, said that it was “not clear how this announcement will help the millions of people who will struggle to heat their homes this winter”.
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Lesson in stealth taxation.
1.Persuade the public they will get free insulation at the expense of the fuel companies.
2. Fuel companies raise charges to offset and satisfy shareholders.
Government, meanwhile, quietly rakes in all the lovely VAT that such a volume of work generates.
Rick O`Shea, UK,
Labour are in debt, they have taken a treasury surplus and turned it into a deficit with serious liablities to the world bank. Labour have taken the disposable income from my pocket and now I am in debt. There is pattern emerging LABOUR = DEBT for us all.
steve tea, manchester, cheshire
Here we go again! Another stealth tax, this time with the connivance of the energy people. But this is like council tax, it is not related to ability to pay. Far left Brown's at it again, fleecing the middle class. He should be honest and raise income taxes to pay for these handouts.
Colin, shrewsbury,
Yet another stealth tax from a government too frightened of the Big Six energy cartel to break it up. Who needs OPEC, when we have a domestic version which is just as bad?
Paul, Coventry,
Treat the electorate to some degree of intelligence and accept the fact that this latest measure is another one of browns sleight of hand illusions.
It is obvious that the energy companies are having a field day and our so called government is unwillingto do anything about it.
mike, London, uk
Deregulation has not worked. Competition in the market place has given us the energy prices we have today while the energy companies all make obscene profits. Perhaps we should make an example of one of them. All we need is a Virgin energy company to do the watchdog's job.
Lynda, Glasgow, UK
Saying it's unfair to blame the energy companies is like saying the Taliban are quite naughty! The energy companies, like all ex-public utilities have a license to rob the consumer and pay it to their senior management and shareholders, Business needs ethical and competant management not leeches.
Gray, Oxford, Oxon
Don't forget, El Gordo and MP's from all parties do not care how much we pay for gas and electric. They get us to pay for it through their allowances.
David Kinsley, Derby, UK
Every Christmas I say to my mother "Don't spend your Fuel Allowance on gifts"
Reply: "Well I'm not spending my own money, it's extra I get in the bank at Christmas with my pension - so stop telling me what to do with it"
Seriously, I believe it's "given" to be put back into the economy!
Darren Ward, Manchester, UK
It is unfair to blame the energy companies because they made a big profit. That blame goes to speculators. And don't think having a windfall tax balances up the costs. These companies have to invest heavily to obtain future sources of energy.
Richard, Plymouth,
Gordon, why stop at fuel? surely they need some warm clothing and maybe some food too? that way they can continue to spend their state handouts on what they prefer rather than these inconvenient necessities of life that ordinary people somehow have to afford.
D.Cameron, Notting Hill, UK
So the government is using money from a scheme to prevent global warming for a scheme to stop us freezing.
Many many houses CANNOT be insulated any better -- they have solid walls.
This is just another Brown scam. the whole Brown paradigm is shot to pieces.
TrevorsDen, OXON, UK
Guess what Gordon you've got it wrong again.
The energy companies will just pass on the £910 million to people like me - ordinary working people who work and have to pay all my bills in full, not to mention all the taxes!
Nice one.
This is another vote you will not be able to count on !!
Martin Briggs, Heversham, England
Soak the energy suppliers then expect them to invest in renewables and nuclear. Guess who pays again!
Howard, Chester,
Where-else do energy companies get their money from but the consumer. If Gordon really believes the cost of this package, supposedly being funded by the energy companies, won't ultimately be paid for by further price rises to the consumer then he is seriously delusional & shd get medical treatment.
Donna Walker, Effingham, England
Translation: "Money does not grow on trees"
Unless of course you are a politician, in which case money magically appears for you to hand back to the people you took it from in the first place.
Damian, LONDON, UK
Well,well,well. After all the political waffle and the energy suppliers guff, it is,as anticipated going to be the captive customers who are going to foot the bill. Is anyone surprised?I doubt it!
Mike O Connor, Plymouth,
Since when is it "news" when Government duplicity dumps new and hidden taxes on the people?
Bob Evans, Anaheim, California
"below zero for seven consecutive days"
Another con. You don't need it to drop below zero to freeze. Furthermore, how likely will it be for seven days. BROWN still up to conning everyone.
A vast majority will not be able claim under these criterias even in the long term. In words there is 0
Asw, Hong Kong,
The North Wales Energy Advice Centre inform me that Home Insulation Grants are not available for houses which do not have a full loft.
Thus homes with rooms in the roofspace and with flat roofed dormers are ineligible for Grant Aid.
I urge all affected to write to DEFRA and their MP.
Alan Hargreaves, Holywell, UK