Energy bills: Taxpayers' Alliance on Daily Politics Soapbox


Britain can't afford rising energy bills says Matthew Sinclair

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Each week, the Daily Politics offers a platform to a well-known face to make a film with their personal views on a subject, before debating them in the studio. Here, Matthew Sinclair from the Taxpayers' Alliance - a pressure group which lobbies for lower taxes - argues that energy bills are being inflated to pay for the fight against climate change.

When you open your gas or electricity bill, are you aware how much you are paying for failing attempts to cut greenhouse gas emissions?

The bad news is there is worse to come. In the coming decade, we can expect drastic hikes in prices to pay for draconian climate change regulations.

To meet our environmental targets, we will need to invest more in the energy sector this decade than Germany, France and Spain put together.

And paying for all that investment means higher profits for the energy companies. Paying for those profits means higher bills - £200 billion of investment doesn't come cheap.

Analysts at Citigroup have warned that the huge investment needed in the energy sector will require a real terms rise of more than 50% in our combined energy bills by 2020.

Start Quote

The most expensive sources of power get by far the most subsidy”

End Quote Matthew Sinclair Taxpayers' Alliance

Using energy more efficiently might help a bit. But estimates suggest bills would still need to rise by a third and then we would have to pay for all the insulation and double glazing too.

They think that will mean an affordability crisis so it's no wonder a Populus poll in July found that more people were concerned about gas and electricity prices than any other economic issue - 63% said they were very concerned about energy bills, compared to 36% very concerned about public sector cuts.

Businesses will have to pay more too. Those that can't pass the cost on to us are in trouble. Tens of thousands of jobs are at risk, starting with the most energy intensive industries like aluminium smelting, producing industrial gases, steel making and the production of glass, paper and cement.

Energy bills: Grant Shapps, Tessa Jowell and Matthew Sinclair

Energy is a substantial part of their total costs and if those costs rise here, they will come under huge pressure to invest elsewhere.

Despite hopeful promises from many politicians, green jobs won't make up for those lost opportunities.

Recently a firm called Solyndra in the United States, hyped up by President Obama and recipient of $535m (£340m) in government loan guarantees, filed for bankruptcy and was then raided by the FBI.

Even in Germany it seems, more jobs have been lost than gained thanks to these measures.

It is people in countries like China, who make equipment like solar panels at the lowest cost, who will get the green jobs, not mugs like us who buy them.


Gas ring
  • "Although our half year profits were better than last year they do not begin to match the billions of pounds we are investing in energy for the future. With reduced quantities of North Sea gas, we are now forced to buy energy on the volatile global wholesale market. World events have pushed up prices and we believe this trend will continue" Npower (August 2011)
  • "Uncertain times have had a huge effect on wholesale prices, with events in Japan and Libya all having a dramatic effect on gas and power prices in a relatively short period of time" E.On. (August 2011)
  • "Despite household energy bills having rocketed by almost £500 or 71% in just over five years, consumers are still being asked to pay more" Ann Robinson of Uswitch (July 2011)
  • "We are buying in a global energy market and have to pay the market rate. Rising wholesale costs is an issue facing all energy suppliers" British Gas (July 2011)
  • "The UK electricity market has to change, so that we escape the cycle of fossil fuel addiction. Alternatives like renewables and nuclear power must be allowed to become the dominant component of our energy mix" Energy and Climate Change Secretary Chris Huhne (July 2011)
  • "Wholesale prices for gas and electricity have increased significantly since the end of last year and continuing unrest in global energy markets means future prices are volatile. We understand times are difficult for many people, and we have done what we can to absorb these additional costs for as long as possible to minimise the impact on our customers" Scottish Power (June 2011)
  • "In the last six months, the leading energy companies have all provided advance notice to customers of their price changes, going beyond the legal requirement at the time" Energy UK (April 2011)

Despite the huge cost, this enormous rip-off makes little difference to potential global warming. Our paltry share of global greenhouse gas emissions - less than 2% - is almost meaningless.

Particularly if we just export the energy consuming processes. Emissions and jobs moving from Runcorn to Guangdong does nothing for the climate. Estimates in a 2008 study for Defra suggest that while greenhouse emissions produced in Britain have been falling, the amount produced supplying British consumers has been rising.

Politicians make all these measures less cost-effective by picking losers. The most expensive sources of power get by far the most subsidy.

Offshore wind gets nearly £100/MWh in subsidy. Electricity typically sells at wholesale prices significantly lower than that, so it's a massive subsidy on top of the return they can get selling the electricity they generate.

But when people put solar panels on their roof they can get an incredible guaranteed price of over £400/MWh.

It would be far more productive to focus on research for now, and deploy new sources of energy when they're affordable.

Big businesses enjoying windfall profits and governments levying hefty green taxes will make billions out of environmental policy.

'Most vulnerable'

Credit Suisse expect recent changes announced by the government to add £7bn to energy company profits between 2013 and 2020.

The Carbon Reduction Commitment will raise £1 billion a year for the Exchequer on top of the over £40bn a year raised by existing green taxes like Fuel Duty.

It's consumers that pay the price. The people who are hit the hardest are the poor and elderly, the most vulnerable families in Britain.

It is simply wrong for politicians to hand them the bill for this expensive, corrupted and failing agenda - particularly at a time when there are so many other pressures on their finances.

They can't afford it, Britain can't afford it.

Matthew Sinclair will be on Wednesday's Daily Politics where he will debate his ideas with Labour MP Tessa Jowell and Conservative MP Grant Shapps after his film is shown about 1240 BST. The programme runs on BBC Two from 1130 to 1300 BST, or later on iPlayer.


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  • rate this

    Comment number 36.

    Part of the problem is actually letting the government think that the AGW theory is even partially correct. As there is as yet no evidence to support this theory, one of the core challenges must be to remove that underpinning of their climate change policies such that the policies cannot be supportable.

    However, do continue the good work to bringing some accountability to this stupidity.

  • rate this

    Comment number 35.

    24. DevilsAdvocate
    15TH SEPTEMBER 2011 - 21:57
    "....... then use the money to build nuclear power stations now".

    Problem is, the government (Tory or Labour) don't want to spend billions of pounds building nuclear stations.
    So it's down to the utility companies like EDF and Centrica to do it.
    But they can only do it if they have profits to re-invest and nobody wants them to make a profit
    Catch 22

  • rate this

    Comment number 34.

    Sorry - who are the Taxpayers Alliance?

    I think they are a pressure group of rich neo-libertarian Tories with a strong political agenda. I suggest that this article is read with this in mind....

  • rate this

    Comment number 33.

    The reason our energy bills are so high is down to simple greed by having just 6 suppliers operating what amounts to a cartel.The vastly increased profits of all 6 is evidence of that.Lets not give govt's another excuse to invent yet more taxes based on nonesensical claims of them being 'green taxes'.GW? yeah right, and the moon is made from cheese.

  • rate this

    Comment number 32.

    ...Who knows, it may be that both sides are correct - we may face both natural and man made change combined.

    So we should stop playing a being 'King Canute' and prepare/adapt our civilisation for the 'tide' of climate change that is coming, because it will come or not regardless of what we do.


Comments 5 of 36


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