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David Cameron accused of ‘smoke and mirrors’ on energy bills

 
Ed Miliband, U.K.

Ed Miliband will point out that most fuel bills are at a record high, while accusing the PM of making secret deals with the big six firms. Photograph: John Giles/PA

 

Powered by Guardian.co.ukThis article titled “David Cameron accused of ‘smoke and mirrors’ on energy bills” was written by Rowena Mason, political correspondent, for The Guardian on Sunday 1st December 2013 22.17 UTC

David Cameron stands accused of using “smoke and mirrors” tactics over his pledge to cut energy bills, with critics claiming that fuel prices will be at a record high this winter and cuts to energy efficiency schemes will come at the expense of some of the poorest households.

The government has pledged to bring down energy costs by taking £50 off bills and offering new home-buyers up to £1,000 to help install insulation, double glazing or green boilers as part of Thursday’s autumn statement, which will be set out by George Osborne.

The chancellor confirmed on Sunday that the measures would be funded by a further crackdown on tax avoidance and also by scaling back the Energy Company Obligation, a scheme to help poor households use less energy.

Osborne also hinted that more benefit cuts are needed to ensure the economy is “sustainable”, telling the BBC’s Andrew Marr Show he was “clear more action will be required on welfare”. It is understood the autumn statement will contain more details of a £100bn cap on welfare spending after the next parliament, but there will be no further benefit cuts before 2015.

It will also detail more help for small businesses, including a likely freeze on business rates, while Nick Clegg is announcing an extra £250m of funding for the government’s new business bank to be based in Sheffield, near the deputy prime minister’s own constituency.

However, the main focus of the autumn statement has so far been on energy costs, as the coalition scrambles to respond to Labour’s promise of a price freeze after 2015 if it wins power.

The big six firms – British Gas, EDF, EON, Npower, Scottish Power and SSE – will come under pressure to announce official price cuts or freezes within days of the government’s detailed plans being published, which are estimated to save the typical family £50. One energy company, EDF, has already said the announcement means it will not have to raise bills again for another year and it is understood that Npower is in a similar position.

However, Ed Miliband will point out on Monday that most fuel bills are at a record high. The Labour leader will accuse Cameron of making secret deals with the big six energy firms, claiming that fuel costs this winter will be £120 higher on average than last year.

Speaking at the Volkswagen National Training Centre in Milton Keynes, Miliband is expected to say Labour would deliver “not smoke and mirrors on electricity and gas bills or cosy deals with the big six that mean bills still rise this winter, but a real price freeze and action to reset the market to stop them overcharging again in the future”.

Ed Balls, Labour’s shadow chancellor, accused the government of “taking with one hand and giving with another”, as about £40 in cuts to bills will be funded by watering down the ECO scheme to help the fuel poor, while another £12 will be shifted on to general taxation.

The charity National Energy Action is launching a campaign on Monday calling for more radical action to end the “cold homes crisis” that the government is failing to solve.

It said cuts to green levies would come at the expense of poorer households, who are likely to get dramatically less help to cut their bills under existing schemes and are less likely to qualify for the new £1,000 discounts to fund energy efficiency measures for home-buyers.

Jenny Saunders, its chief executive, said that without an “increase in the targets or a refocusing of the policy on low income households or deprived areas, [it] is likely to result in a dramatic fall in the annual number of measures delivered to fuel-poor households”.

MPs on the Commons environmental audit committee will urge the government on Monday not to weaken its commitment to stamping out fuel poverty. The Labour MP Chris Williamson will lead a fight in parliament on Wednesday to stop the government replacing a target of “eliminating” fuel poverty with the watered-down aim of “addressing” the problem.

It also emerged that the £1,000 offer for new home-buyers to spend on energy efficiency measures has been designed to boost the government’s flagging £1bn Green Deal scheme – which offers government-backed loans for home improvements of up to £10,000.

Sources confirmed the new offer will run “in parallel” to an existing scheme offering people up to £1,000 off energy efficiency measures as a sweetener if they sign up to the Green Deal, which is due to end in March 2014. So far it has failed to significantly boost take up of the programme, with the Green Deal only managing to sign up around 1% of its target of more than 100,000 households so far.

A senior Whitehall source said the new £1,000 offer would be a “great driver for demand” for the Green Deal and that would extend the existing cashback offer. However, critics may see the move as a last-ditch push to revive the struggling policy.

 

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