UK poor will need help with energy bills, says CCC

By Roger Harrabin
BBC environment analyst

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image captionBy 2030, people will be paying about £130 a year for fuel bills, the CCC says

Poor families in the UK will need more help to pay for heating their homes as energy bills rise, government advisors have warned.

A report by the Committee on Climate Change (CCC) said subsidies for clean energy will add an extra 36p per day onto household bills by 2030.

Many poor households will also need more support with insulation and clean heating, the report added.

Energy-intensive industries will need continued help too, the CCC said.

A government spokesman said that investing in energy efficiency is the best way to reduce long term bills - and that thanks to government policies, bills are an estimated £90 lower this year than they would otherwise have been.

But the CCC said the chancellor, George Osborne, had cut total investment in energy efficiency from £1.4bn to £800m.

Insulation costs

Ed Matthew, a spokesman for the fuel poverty campaign The Energy Bill Revolution, which strongly supports the CCC report, told BBC News:

"The situation is crazy. Insulation offers by far better value for money than road-building, yet we have just seen £100bn announced for infrastructure without a penny for insulation.

"We can't load the whole cost of insulation on to bills - many people just can't afford it," he added.

This is the CCC's third report into the impact of low-carbon policies - the so-called green taxes that have been heavily criticised in parts of the media.

The report said household bills increased by 75% from 2004 to 2013, compared with general inflation of 23%.

But the CCC maintained the principal factor was the price of gas - and that 80% of the bill increase was not related to low-carbon policies.

It found that policies to support cleaner electricity added £45 to an average £1,140 bill in 2013.

image copyrightThinkstock
image captionThe installation of LED bulbs could help bring down household energy bills

A further £55 per household helped to pay for 200,000 new boilers and heating controls, and supported the insulation of almost 200,000 homes.

The committee said 40% of the insulation measures benefitted low-income and/or fuel poor families - a figure fuel poverty campaigners say is too low.

The report estimated that by 2030, people would be paying about £130 a year extra for subsidising clean energy and helping the fuel poor.

It said that is a small fraction of the total £1,305 dual fuel bill expected for the average household at that date.

'Capitalism will find a way'

The committee added that future costs are inherently uncertain - but it believed many of the price rises it projected are avoidable if people reduce energy consumption in their own homes.

Its new chief executive, Matthew Bell, said the whole price rise for clean energy could be offset by installing LED bulbs in a home.

"It's rational for people to save energy as bills go up - and there are many ways for people to do so, but we haven't counted that in our calculations" he said.

The committee's chairman said future efficiency improvements to household appliances like fridges and vacuum cleaners would also help to keep down bills.

"If there is a demand for pushing down costs, capitalism and good regulation will find a way," said John Gummer.

But he said poor households and energy-intensive industries would need continued support - although he added that government support to these industries up to 2020 had been "rather generous".

image copyrightThinkstock
image captionEnergy-dependent firms are pushing for more government support

The report found that for commercial and industrial users, bills are likely to rise due to low-carbon policies by between 9% and 17% from 2013 to 2020; and a further 12-25% to 2030.

Energy costs currently represent just 0.5% of commercial sector costs and around 2% in the industrial sector.

That means if prices are passed on to consumers, the impact will be small: approximately 1p to every £10 spent in the commercial sector, and 6p for every £10 spent on manufactured goods.

The CCC said energy-intensive industries will need continued government support to prevent them from migrating to places where clean energy policies are less strict - so-called carbon leakage.

But it said further measures won't be needed until 2020.

The committee said by 2030 it expects most electricity to come from low-carbon sources; energy prices and bills should then fall as support payments start to expire and new technologies get cheaper.

A government spokesman said: "Our policies are designed to keep the lights on, reduce polluting emissions and cut energy use at the lowest possible cost to gas and electricity customers.

"That's why we have installed energy efficiency measures through schemes like ECO and Green Deal to over 819,000 homes and a further 600,000 homes are set to benefit by 2017."

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