Archives for posts with tag: Ed Miliband

Barry Gardiner, Member of Parliament for Brent North and Ed Miliband Special Envoy for Climate Change

Barry Gardiner,  Member of Parliament for Brent North and Ed Miliband’s Special Envoy for Climate Change, tells us his views on the future of UK energy prices…

It is very simple. Rural households pay more for energy.

Rural households classed as being in “income poverty” are much more likely to be in fuel poverty than those in urban areas: 44 per cent of the “income poor” in rural areas live in fuel poverty compared to 26 per cent in urban areas.

These published figures are now more than three years out of date, and although we have no reliable current analysis all the evidence suggests things are getting worse.

In urban areas there are three well known causes of fuel poverty:

1. Poor energy efficiency performance of housing
2. Low income levels
3. High energy costs


In rural areas it is important to add a fourth: Lack of access to mains supply.

Out of every hundred rural homes 42 are not connected to mains gas, compared to 8 per cent in urban areas.

Rural households rely more heavily on oil and bottled gas to heat homes, the prices of which have both risen significantly over the course of the last few years. Rural households are also unable to take advantage of the dual fuel discounts which are offered by many energy suppliers.

Households cut off from mains access to energy simply pay more. The average heating bill for a three bedroom house using domestic fuel oil is 84% more than the cost of mains gas. For liquid petroleum gas (LPG) that figure rises to
130% more.

But homes that are “hard to heat” are often also “hard to treat”. Many rural houses have solid walls and these homes need more expensive internal and external solid wall insulation that is not currently included in Government Grant Schemes such as Warm Front.

In fact 34 per cent of homes in rural areas are classed as hard to treat and these account for over 50 per cent of the UK’s total carbon emissions from housing.

Any programme delivering energy efficiency measures in rural areas costs more due to greater distances between households and the inevitable loss of efficiencies that can be achieved in more densely populated urban areas. Warm Front has confirmed that even where householders were eligible for a grant, some people cancelled energy efficiency work because they were unable to pay top up costs.

Those living in rural areas were much more likely to cancel through an inability to meet the average top up bill of £875.

In fact up until 2008, cancellations of work in urban areas due to top up costs were 26.4 per cent, whilst in rural areas they were 73.6 per cent.

Between 2000 and 2008 only 10 per cent of Warm Front Grants were awarded in rural areas. This figure climbed to 15 per cent in 2008/09 but it is clear that even this rate of addressing the problem is wholly inadequate to meet the exceptional level of need in our rural communities.

We should be calling for major programmes to address rural fuel poverty. They must be specifically targeted to deliver insulation solutions for solid wall properties and, where insulation is not viable, government should work to deliver micro-generation and community based heating schemes to deliver lower cost alternatives to rural households.

By 2008 Germany had over 2,500 anaerobic digestion plants in rural areas. In the UK we had precisely 23.

Such a technology could be used to power energy generation at a community level in rural villages across the UK, taking by-products and waste from agriculture to provide bio-gas. Using this for local heat and power would provide new jobs in rural areas as well as delivering low cost heating solutions. DEFRA’s own analysis suggests that the UK’s 90million tonnes of agricultural arisings such as manure and slurry could power up to 20Tetra Watt hours of heat and power by 2020.

Do you agree with the MP or do you think there’s another solution? If you’re cut off from mains gas or know someone who is, share your stories with us in the comments below. 

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Image by wwarby via Flickr

The VAT price rise kicked in yesterday – and the potential cost to the average household bill is under the spotlight as politicians debate the impact of higher tax.

It has been described by some as ‘necessary’ and others as ‘regressive’ and cost estimates have varied from £158 per home per year to as much as almost £600, leading to widespread confusion over the real effect a 2.5% increase might have on our incomes.

So which figures are accurate and what are they based on? With costs rising across the board, many will be struggling to get a grasp on which numbers to trust as they grapple with budgeting for the New Year.

Here are some of the figures you may have seen in the headlines and what they actually refer to:

£1,600

Source: various charities

This is the figure that charities including Barnardo’s, Save the Children and Oxfam estimate many households will now pay in total VAT cost, claiming that a low-income family could spend as much as £1,600 per year on their VAT bill. Save the Children says that this figure is based on official Office for National statistics data which suggests that the bottom 20% of households will be paying a higher VAT bill.

However, this is an average weighted estimation, meaning that it takes in to account a large range of homes, including large families on low incomes and therefore may not be applicable to those with smaller annual VAT bills.

£561/ ‘nearly £600’ increase

Source: Deloitte

Figures released by the accounting firm Deloitte have revealed that a family earning a total income of £70,000 will pay an extra £10.80 per week equalling £561 per year.

However, many households in the UK will struggle to make up this kind of annual income so its relevance is dependent on your personal circumstance.

£520 increase

Source: Kelkoo

According to the independent study, commissioned by price comparison website Kelkoo, the increase of 2.5% in VAT will cost £212 per person or £520 per household per year.

This is an updated figure from the original study, which took place in April 2010 and estimated a figure of £425 per household per year.

£389 increase

Source: politicians

Making quite a few headlines was the estimation that the VAT hike would put up household spending by £359 per year.

Labour leader Ed Miliband was careful to announce that this figure was originally featured on a Lib Dem election poster, warning of a Tory VAT ‘bombshell’ of £389 additions to bills per household.

There doesn’t as yet seem to be any clear source on how this figure was calculated, however, this Lib Dem figure was based on the projection that the Conservative government would raise VAT  by 3%, not 2.5%, which it did not. Therefore, this figure at these calculations would be reduced to £324.

£158 (£7.50) increase

Source: uSwitch

uSwitch predicted that the VAT increase would add an extra £158 per household per year.

This figure is based on household essentials only, calculating annual increases from the tax rise in comparison with the typical monthly household spend, as explained in the table below.

Bill Typical monthly household spend December 2010 


Typical monthly household spend January 2011 Annual increase from tax rise
Food £100 £102.75 £33
Gas & electricity £103 £103 £0
Water £30.08 £30.08 £0
Phone/broadband/TV bundle £33.36 £34.19 £10
Mobile phones £84.75 £86.88 £25.43
Buildings insurance* £17.42 £17.59 £2.09
Contents insurance* £9.25 £9.34 £1.11
Car insurance* £104.14 £105.18 £12.50
Petrol £245.37 £251.50 £73.61
 

Total

£157.74