AIBU to worry about a U-turn on the energy price cap?

[DahliaMacNamara]

I have no idea if they can or would do this. If someone can explain why it would never happen, that'll make it a nice short thread. Anyone?

This! I had worked out o would over pay now as I would be protected come January and April but I was bumped off the tariff I signed up for! Now I’ll be far worse off come April than I would have been on my original tariff.

@floataboat I'll sit on that bench with you. I didn't expect them to U turn on the price cap. I wasn't sure about £ next winter, but I thought the Price Cap would stay.

I can live with paying more than before the Russian attacks on Ukraine started, to support Ukraine. But the Govts (of all varieties) should have made different decisions about our Energy supplies over the years, so we were more self sufficient with Energy, it makes me very annoyed that they didn't.

are you fixed or variable??

The kind of X number of units discounted to X price has the same effect as giving every household £66 a month off of their bill though doesn't it, without the added calculating step.
Same number of units discounted by the same amount for every single household = same overall discount for every single household. May as well give another gift payment from April and be done with it, a summer relief rate.

If energy prices stay high this is going to hurt. The mitigation to mortgage costs of this u-turn will be minimal. The Bank of England base rate is still expected to hit 5% next year and could push higher if inflation is as persistent as it looks in the US. This is no silver bullet for borrowing costs, which were heading higher irrespective of Trussonomics. Maybe it ends up saving 1% on mortgage rates, but if you then double (or worse) people’s power bills…

@Genevieva Your post toally ignores that the cost of government borrowing has been increasing massivley since the "mini budget" - it is that which is driving where we are. Despite what some people think - investors don't have to loan the UK government money (and if they believe the loan more or a risk, then of course they are going to expect much better return interest rates to give a higher return on their lending)

The elderly and disabled already get 'warmer homes' which is money if temperature very low

Do you mean cold weather payments?

You’ll get a payment if the average temperature in your area is recorded as, or forecast to be, zero degrees celsius or below over 7 consecutive days.You'll get £25 for each 7 day period of very cold weather between 1 November and 31 March.

www.gov.uk/cold-weather-payment

This is the govt punishing us all for not being grateful enough when they offered it the first time.

They're trying to calm the markets and wait for the next budget to throw average people a bone - once we grovel nicely.

They're creating a very cruel winter.

The energy crisis is not down to the government, but external events. What’s actually making it a crisis in the UK is the decisions that have led us to being so exposed to it. A lack of investment and impetus in nuclear and alternative energy sources, the closing of the Rough gas storage facility etc. have all been decisions made by the Tory governments (and to some extent, Labour before that), but which is now having a massive negative impact on our ability to respond.

As with all governments and the decisions they make, when they get it wrong, it’s the people who have to pay the price. But make no mistake, excuses that it’s due to circumstances that they can’t (or more accurately, couldn’t have) controlled or limited, just wont wash.

Same old same old.
Those that work hard for their money are taxed further and further.
Those that have climbed the slippery slope giving up 12 hours of their day Monday- Friday to earn a meager bit more are taxed even further.
Sit around all day on your arse and get a bigger and bigger slice of what others have worked for.
Dont mind helping people in genuine need but that’s the minority IMO

Yes, very well said. I want to hear specific details from the government on how they’re addressing our energy infrastructure to avoid this in the future. It’s not enough to just hope prices come down and stay down.

@WeBuiltCisCityOnSexistRoles

I would have quoted you but that's a lot of text.

I think we need to be worried about both the squeezed middle and those with disabilities. I fall into both camps.

The squeezed middle are probably always one or two steps away from needing significant state support. Loss of job, interest rates going a bit higher etc - can push a family quickly into homelessness. Part of the issue is that there is nothing to rent for a reasonable cost. Mortgage costs can often be cheaper than renting the same property.Families can quickly become dependent on state support.

If, due to a mixture of energy prices, interest rates, rising food costs etc a large number of families end up unable to pay their mortgages, this represents a serious crisis - and has the potential to require significant state funding - where is that money coming from? (Currently I would argue these families are likely to have 2 working parents, paying tax and possibly not that reliant on state funding in terms of child care credits etc. Some might have one earner over 50k so no child benefit either. They sound wealthy don't they? But they are heavy net contributers in terms of tax.) The country can't really afford for a large number of these families to switch from net contributers to becoming those that rely on state assitance.

On the other hand, we have the disabled a class of people with expensive and specialist needs. Not every disabled or vulnerable person will need to heat a room to the same level or require the same level of assistance. However, I am aware of a number of families who have been paying privately to support a family member in one form or another - whether that is physio, buying equipment etc. When those families feel the pinch and can no longer afford to support then the burden on the state will be even greater.

I also think that those people who have medically required equipment at home which uses electricity do need extra assistance. I'm lucky as I need a fridge which I would run anyway and also a pump which is not daily. I have been advised that I would meet the threshhold for PIP - I rely on help to cook, dress, clean etc. I have never made a claim as I am middle income earner and feel that I should just suck up the cost. The trouble is I'm not going to be able to suck up the cost much longer so I will look at making a claim. I can't be the only one in this position.
I do think special provision needs to be made for people with specialist equipment and extensive needs. I couldn't even begin to suggest how this would be funded.

i thought it was help till April, hadn't heard two years.

Elderly mum also worried that help might be withdrawn this winter.

No government in the last 30 years has taken energy or food security seriously enough.

Covid proved that. Climate change is the other elephant in the room.

This isn't restricted to the UK either.

I'm unable to work due to ongoing chemotherapy, you think I should have even less than the already ridiculously low amount of benefits I currently get?!

I paid tax for over 15 years until suddenly i was unable to work. I can hardly afford to eat let alone keep warm at home.

Please re think hating benefit claimants for the dire situation our government has put us all in!

@Flapjacker48 You can't cover everything in a single social media post. It isn't an academic essay. Just as your point shows limited knowledge of how government borrowing works. There are obviously a lot of factors, but the ones I mentioned are getting drowned out.

It did not surprise me, more because they way they go about everything is so cack handed and costly. They would never just tell the energy providers to go whistle for the cap to rise, no they give tax payers money back to them to pay four months worth of bills, as well as subsidising the providers with millions of tax payers money. It was an expensive gamble.

At this point, I think I'd wanna tag the other team in!!

People on benefits pay for their energy too. Not sure what your point is.

BP reported its biggest quarterly profit for 14 years, making £6.9bn in the three months to June this year.

BP received more money back from the UK government than they paid every year from 2015 to 2020, they do this by offsetting tax payments for the exact things you're talking about- decommissioning North Sea oil platforms and further exploration.

The reason Truss was against windfall tax, because it didn't fit the Britannia Unchained: ideology of Truss, Kwasi and Mogg

The EU have a tax levy, along with mandatory cuts in electricity use, which means their citizens can afford to eat and stay warm.

Taxing excess revenues made from surging electricity costs is not stopping future exploration, it only has an impact on bumper shareholder divi's and bonuses for the C-suite

www.birminghammail.co.uk/news/cost-of-living/dwp-excluded-warm-homes-discount-24703316

I also should have said that this year's warm home discount scheme (which has g9ne up from £140 to £150) has changed (unless you're in Scotland)

Those on the Guarantee Credit element of Pension Credit will automatically qualify. For everyone else though...

• Just being in receipt of PIP or DLA alone isn't a qualifier any more. As well as needing to be in receipt of qualifying benefits/tax credits, it's also going to be based around the size and energy efficiency of the property, based on VOA data.

Just a heads up @caringcarer

I also agree with this, and that's the policy in Albania apparently.

Hopefully they will replace it after April with something similar to the system Germany has just announced to support household energy bills.

You would get a certain amount of kWh (units of electricity) at a heavily discounted rate and then after that you pay more, and after a certain level above that, you start paying full market rates.

It encourages energy efficiency where as the existing cap just meant little incentive for wealthier households to reduce demand.

Poor households use less energy (live in smaller homes, have fewer things running, are more frugal) so are less likely to consume enough to be in the top category. But people with spare bedrooms they keep hot, running hot tubs and heating look carp ponds can and should be paying full market prices with zero subsidy provided.

Hunt said today that whatever replaces it will promote efficiency so I hope they aren't too proud to just borrow the German plan

Old people living alone in big homes might also be encouraged to sell and downsize which would also have positive effects in areas with housing crisis.

That really wouldn't work. Things like which way your house faces makes a huge difference. As does the houses around you.

Although it's easy to say, I'm not going to worry about what might or might not happen in April. Lots of things might have changed by then...who knows...we might even have had a snap election and have a new government with different policies, in power!!

Yes it will impact future E&P.

If you are a corporate and have a choice between investing in a country that has a stable and long term corporation tax policy, or one that has a policy that changes at random depending on a number of political factors then you will invest in the first not the second, especially if you are going to invest for decades in infrastructure.

The North Sea is not looked on as a great place to invest in E&P. There are many more lucrative areas around the world. So a poor tax environment is not going to help that at all.

If you want to cite BP as a particular example, yes it has profited from North Sea operations because of Russia. But it has also had to write down a lot of investments that it had in Russia, so as a business it is swings and roundabouts. It also isn't that big a producer (maybe 4th or 5th largest) in the North Sea.

Most people seem to have forgotten there is already been a windfall tax in place by the UK on North Sea profits.

As for the EU efforts, a significant proportion of the EU energy sector is public owned. So it's probably just a smoke and mirrors exercise.

Generally I'm supportive of taxing companies who wriggle out of paying enough tax - there are several large ones that do this. But taxing energy companies when we actually need more not less investment in energy (oil and gas as well as renewables) seems like madness to me, and probably is going to be long term counterproductive to energy security.