By George Parker, Pilita Clark and Jim Pickard
Ministers are to “stress test” green measures that have contributed to
rising fuel bills, as British Gas added to the political controversy over
rising energy prices with an average 9.2 per cent increase from next month.
Nick Clegg, deputy prime minister, said ministers would look at all
measures imposed on fuel bills by the government to make sure they
bolstered infrastructure investment and insulation and tackled fuel poverty
in a cost-effective way.
But David Cameron’s “quad” of senior ministers – including Mr Clegg, George
Osborne, chancellor, and Danny Alexander, Treasury chief secretary –
concluded last week that stopping spiralling energy prices had no easy
solutions.
Mr Osborne has dismissed removing the so-called carbon price floor – which
raises more than £1bn a year for the Treasury – from customers’ bills on
the grounds that it is not a top priority for the cash-strapped exchequer.
The chancellor argued that the coalition should not fight Ed Miliband on
“his chosen territory” by trying to match the Labour leader on his promise
to freeze energy bills for 20 months after the next election.
Mr Osborne and Mr Clegg believe that the coalition should instead ensure
that government-imposed levies on fuel bills were “value for money” and use
competition to reduce the scale of any bill increases.
Mr Clegg told the Financial Times: “People won’t thank us if – in a few
years’ time – the lights go out or there are more people in fuel poverty
and there are fewer homes that have been properly insulated,” he said.
Mr Clegg said that investment in insulation and green technology either had
to be funded through energy bills or higher taxation, but added: “It would
be irrational not to look at these policies, to stress test them.”
While some Lib Dem MPs believe a switch to general taxation would be
fairer, the option is not seen as a likely solution by either the Lib Dem
leader or Mr Osborne.
Labour seized on the British Gas announcement – which followed an 8.2 per
cent price rise by SSE – as further evidence of the need for a price freeze
until a new competition framework was in place.
But Mr Clegg said Mr Miliband’s promise was a “100 per cent, 24-carat con”
because Labour could not buck the market if wholesale energy prices were
rising in 2015.
The British Gas move provoked a storm of outrage on Twitter after the
company invited people to question its customer services director, Bert
Pijls, about the price rise, which will add £123 a year to an average
dual-use fuel bill, taking it to an annual £1,444.
“Hi Bert, which items of furniture do you, in your humble opinion, think
people should burn first this winter?” said one respondent.
British Gas said it recognised energy bills were a “real worry for
hard-pressed households” and said it had been a difficult decision to
approve an 8.4 per cent rise in gas prices and a 10.4 per cent increase in
electricity prices.
“We haven’t taken this decision lightly,” said Ian Peters, managing
director of British Gas Residential Energy.
“But what’s pushing up energy prices at the moment are costs that are not
all directly under our control, such as the global price of energy, charges
that we have to pay for using the National Grid . . . and the cost of the
government’s social and environmental programmes.”
However, researcher Reg Platt of the IPPR think tank, said the question was
not whether the government’s policies needed reforming, but why British Gas
was delivering them so poorly.
“A third of today’s tariff increase, or £35 a year, could have been avoided
if British Gas delivered the government’s energy efficiency policies as
cost effectively as SSE.”
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