We need a windfall tax on fossil fuel companies profiting from fuel poor consumers

Isabel Davies

The gas crisis is bringing misery and death to people already struggling to survive this winter.

It is the result of the government and Ofgem failing to take basic precautions for when international gas prices rise: 

  • they allowed gas storage units to close; 
  • failed to invest in meaningful energy efficiency programs; 
  • and left privatised retailers to expose consumers to volatile wholesale prices without buying in advance. 

We know that UK consumers cannot afford to pay energy companies more money for these mistakes. The money must come from those benefiting from the crisis.

In October we proposed a windfall tax on the profits of fossil fuel extractors. We argued that some part of the $65 billion they made between July and October must not be spent re-investing in fossil fuel exploration, development and extraction, which will further accelerate the climate crisis. Instead, a proportion of the excessive profits must be spent helping consumers keep warm and put food on the table. 

Analysts now forecast that the average energy bill will rise almost 50%, to about £1865, this April. National Energy Action estimates this will push another 2 million people into fuel poverty, while of course creating further pain for the 4 million people already unable to pay their bills.

Across the industry, experts such as retail chief executives, former energy ministers and belatedly the labour party are now joining us in calling the government to announce a windfall tax before consumer prices rise in April. 

We demand again that the windfall revenues from the international gas crisis are spent on helping people stay warm this winter. To ensure the poorest are reached:

  • This should be via a flat payment to each household and not means tested. 
  • The money should not be spent on funding reduced bills through VAT removal, which would disproportionately benefit the richest consumers.

No one should be cut off for lack of money to top up a meter!

After gas and electricity were privatised around 30 years ago, Ofgem was set up as a regulator to make sure that the private companies remained accountable to the public, to some degree.  Ofgem’s “standard licence conditions” impose quite a lot of obligations on these companies, and monitor customer service. They also have the power to cap prices, and have done so.

But the fact remains that many people just cannot afford their bills, and when you cannot pay you normally get put on a Prepayment Meter. Then you have to keep the meter topped up — it cuts off your power or your gas as soon as credit  runs out. And ofen you can’t get it back on until you can pay off “standing charges” that accumulate even when you’re using no heat or power. This plays havoc with people’s health, prospects, and relationships, and contributes to this country’s 10,000 deaths a year due to cold homes.

Recently, Ofgem has been consulting about what protections should be in place to prevent that happening. Ofgem refers to “self-disconnection” as if we were cutting ourselves off by choice.  But while the name is problematic, there are proposals for some good new license conditions.

Fuel Poverty Action has now responded to this consultation.  We hope this response will help establish some basic principles to prevent people going without the energy we need.  It will be published on Ofgem’s website, and in the meantime it can be found with our other consultation responses, here. Ofgem’s recommendations will be published later this year, but they will not be the last ones.  As the crisis of fuel poverty grows, stronger action will be needed.

Among other things, we press for suppliers to take it into account when people have exceptional needs for electric power, for instance because of district heating or heat pumps that do not perform as promised, or because the cladding and insulation have been removed from their tower blocks.

The Supply Licence Conditions & Guaranteed Standards of Performance run into hundreds of pages. Suppliers are fined sums large and small for serious and trivial breaches, of vast numbers of rules. Ofgem has powers to prohibit the ultimate sanction that suppliers wield to get bills paid: disconnection and so-called ‘self-disconnection’,  We think that is urgent for this coming winter and the hard times ahead.

Have a look here to see what we recommend.

Climate Justice at home: Pressing Questions

How we heat our homes is changing and must change.  The changes are being discussed by the government and experts, but not often outside these circles.  FPA believes it is essential for all of us in the public to be informed and to have a say about what will change and how.  We welcome feedback on the “pressing questions” posed in this new pamphlet, which aims to open this public debate.

'When the facade comes off' – the wider implications of the cladding and insulation crisis

Besides killing 71 people and shattering many more lives, the Grenfell fire has shone a light into deep fault lines in UK housing, politics, and social relationships, all of them disaster areas that are set to cause many more deaths.  In memory of those who have died, the onus is on all of us to seize this moment.
On the front line are the Grenfell survivors, many still crammed into hotel rooms and fighting for permanent homes, the right to stay in Britain, or support to recover from devastating grief and loss.  Right behind them are the residents of other tower blocks.  People who’ve been told they must go to bed each night in a flammable building unless and until they can themselves find the money to replace cladding.  And people who have had the cladding and insulation stripped off their buildings, for safety, but who now find their homes exposed to freezing winds, and damp, for months, or even years.
Grenfell has exposed:

  •  Social housing where residents – the experts on their buildings and communities – cannot make themselves heard.
  • A construction industry driven by perverse incentives and conflicts of interest, without effective monitoring, inspection, or clear lines of accountability.
  • Regulations compromised by commercial interests including the plastics industry (searching for markets for a tide of petrochemicals fracked in the USA).
  • Privatised and ineffective inspection of building processes and materials.
  • Local government removed from the control of local people.
  • Central government which can promise to “keep our people safe” and then continue to claw back the money on which safety depends.
  • Ill equipped, ill funded fire services and a shortage of fire experts.
  • Run-down skills and capacity in construction, manufacturing, and research.
  • Housing standards, duties of care, and laws on wilful neglect that can be breached with impunity, in a crisis like the present one, and even on a routine basis, day to day.
  • Leasehold contracts that leave residents without  effective protection from their landlords
  • A system which ignores the views of residents, those who know best what is happening in their own buildings/areas.
  • Regeneration that breaks up the communities on which rest people’s health and happiness
  • Leasehold contracts that leave residents without effective protection from their landlords
  •  Hundreds of thousands of flats sitting empty, many bought up as investments for the portfolios of billionaires, while people sleep on the streets outside, and Grenfell families, like others made homeless, are crammed into a hotel room.
  • A system of financial auditing – the critical safety net against corruption and corner-cutting — where the auditors are financially linked to the businesses they are inspecting.

Small wonder that as cladding comes down from new or refurbished buildings, local authorities are finding that the glossy exterior has been concealing missing fire-breaks and insulation, faulty structural fixings, holes in walls and floors, and inferior materials – the basics are not there.
Critically, they have found insulation missing – a scandal FPA are very familiar with, as residents on new build housing estates contact us, unable to heat their homes.  Their homes have high EPC ratings – deemed good on “energy performance”, but thermal imaging shows where contractors have simply saved money by leaving insulation out.  UK homes – for this reason and because little is being done to tackle draughty, damp, and hard to heat older housing – are among the coldest in Europe.  Landlords’ legal obligations, such as they are, are not enforced, and the central government funding, which paid for health and safety officers, has been taken back by Whitehall.  Official standards for insulation, won over decades of pressure by energy and fuel poverty lobbyists, are still there, on paper, but are missing on the walls.
As the changing climate removes the blanket of Jet Stream protection which has until now kept the UK climate temperate, the first people to pay will be those on low incomes living in poorly insulated housing.  Many will pay with their lives.  Every winter thousands of people die in this rich country, because they cannot heat their homes.  Like fire, cold kills.
The Grenfell Inquiry, the Hackitt Review, all the meetings, all the demonstrations, cannot be allowed to lead to business as usual.  The present lifting of the cover on “the way things are done” gives us all  a moment of power.
At our meeting “Dying from Fire, Dying from Cold”, Ishmael Francis-Murray from the Grenfell community said, “ If we don’t get change through this, we never will. . .  Right now we have a chance.”
Change must begin with justice and security for Grenfell survivors – and with warm, safe homes for all whose buildings have been immediately affected by this disaster.  It must then reach further.