Energy For All: A strategy for change (and survival)
As the gas price crisis threw thousands more people into poverty, Fuel Poverty Action launched our campaign for Energy For All – a universal, free band of energy to cover the basics like keeping warm and keeping the lights on. Energy For All would be funded by higher prices for people using more energy than they need, windfall taxes, and an end to fossil fuel subsidies.
We had been taking soundings on this proposal for three years, many of them positive, with interest in the EU Commission, political parties, and climate campaigns, as well as our own networks of pensioners and social housing residents. But we were still unprepared for the response to our petition which soared to six figures in the course of a couple of days, and now has over 650,000 signatures. Everyone seems to agree this is “common sense” – from impoverished pensioners and anti-oil campaigners to right-wing media commentators. It would, for a start, provide security and save lives – beginning with the 10,000 a year lost to fuel poverty even before the pandemic and before the recent price rises.
Energy For All would reverse the perverse situation with the present energy market, where you pay more per unit if you use less energy, and less per unit if you use more. This penalises people who cut down energy usage, often to near zero, for climate reasons or because they just cannot afford it – but then find they are still paying a huge standing charge. FPA is fighting to get Ofgem to stop loading costs (like the costs of failed suppliers) onto the standing charge element of the bill, and ultimately to remove standing charges altogether. That would at least put charging on a level. But we believe the injustice should actually be reversed, so people who use less – normally those who have less resources – pay a lower price per unit than others. That would be accomplished by the free band at the bottom for basic energy use. I.e., Energy For All.
We have been asked many questions about it over the last few months, and this page attempts to answer some of them.
Our conclusion is that Energy For All is both universal and targeted, it takes from Big Oil to give to the people they’re exploiting, it offers security in a time of turmoil, and it reverses gross injustices that most impact the poorest people in the UK. A campaign on this issue will have many immediate benefits, confronting the assumption that the market must rule with a practical way of basing energy on need, and challenging the profiteering of the fossil fuel industry.
Energy For All Frequently Asked Questions:
Q – What about people who need more energy, because of their age, disabilities, household size, or housing conditions?
A – these factors would be taken into account in assessing a household’s need. This would require audits of each home. That’s a substantial job but an important one, a necessity when you genuinely set out to make sure needs are met. But much of this information is already being gathered for EPC assessments, welfare benefits, council tax, etc., and it is being used for the purpose of determining who gets the Warm Home Discount. This investment would be well worthwhile and would turn up crucial information about the real state of housing, which is not currently reflected in EPCs.
Q – Is it right to have a universal provision when scarce resources should be targeted? Shouldn’t we just improve means-tested provision, for example via a social tariff?
A – Universal provision is important, to establish that the energy we need is a right, to avoid divisions, and above all, to avoid the traps of means-tested benefits that often leave people in most need to go without, while requiring everyone to jump through hoops to get what they’re entitled to.
Q – Why should we subsidise people who are already rich?
A – Energy For All would not do that. People who are profligate with energy and use much more than their basic needs, would pay more than they do now, due to the higher rate. Part of the purpose of the new pricing scheme would be to cut down the huge contribution of the wealthy to carbon emissions. Many people who can well afford to make their homes more energy efficient, or to switch to renewable sources of heat and energy, would be incentivised to do so. Many would simply stop wasting so much fuel.
Q – Wouldn’t it be better to simply ban disconnections?
A – There have been big battles to ban disconnections in Europe, with some success, notably in Catalonia after a tragic death from fire and a long fight by Engineers Without Borders Catalonia and the Alliance against Energy Poverty. But they don’t have prepayment meters there. In the UK, very few people are disconnected from their supply. Instead, they are forced onto a prepayment meter and if they can’t top up the meter they are said to “disconnect themselves”. Meanwhile, smart meters can now be simply switched to prepayment mode, making it all the easier to force prepayment on customers. FPA is pressing for an end to imposed prepayment meters and has now won at least a moratorium on this issue. The pressure to end forced prepayment meters runs parallel with pressure for people to be in a position where we do not need prepayment in the first place – via Energy For All.
Q – Shouldn’t revenue from windfall taxes be spent on the real solution – insulating homes and switching to heat pumps, solar panels, and other sources of energy?
A – Insulation and the switch to renewable sources of energy are both absolutely urgent, and if the will were there, both could happen at speed. However, massive infrastructure work still takes time, beginning with training a sizeable workforce that can insulate homes without just causing further problems of damp, hazards, or toxicity. For that, there has to be confidence that the programmes will last – unlike previous government schemes and promises.
Energy For All will incentivise the government to invest in energy efficiency, enable homeowners to do so, and press landlords to do so. So long as it is only residents who are paying for heating in poor quality housing, the government don’t care how much it costs. If they were footing the bill to meet what people need, they would suddenly discover an interest in insulation and renewable energy programmes. We believe in street-by-street insulation programmes. Energy For All is a way to get there – and in the meantime to make sure that people don’t die from the cold.
Q – How much is needed?
A – Just as a reference point, £2,000 for every household in the country would require something approaching £16 billion. The calculations and assessments based on need and prices are still to be done, and it may be some time before we know whether these three sources are sufficient to meet the total sum required. But either way, the government will be strongly incentivised to improve energy efficiency, and to turn to cheaper sources of energy (like renewables) as they will be paying to cover our needs.
Q – Where would the money come from?
A – FPA delayed for many months in launching this campaign because we didn’t have staff, expertise, or resources to crunch the necessary numbers. We are delighted that many who DO have such resources are now picking up on this demand and look forward to the results. We are encouraged by some back of the envelope calculations on what could be raised by increasing prices for high users (16,600kwh/yr. – 75th percentile) but these statistics are not ready to share. There is also potential to impose punitive prices on the top 5% of the UK population, in terms of energy use. This small number of super-rich people account for more than 20% of final demand, more than the least wealthy half of the UK population.
In addition, potential revenue from windfall taxes – if not handed straight back to North Sea operators in the form of an “investment allowance” – could yield £4 billion at present, according to Greenpeace figures. The UK is also estimated to contribute £10 billion in fossil fuel subsidies each year (according to the OECD) – now to be augmented by the new investment allowance totalling about £5.7 billion up to 2025 before the new investment allowance. The UK’s supremely generous tax regime, in normal times, of 40% on industry profits, compared to an international average of 70%, also means that there is a lot more money to come. Greenpeace suggest that taxing at 70% could yield £13.4 billion to the public purse this year. Hopefully in the future, gas and oil will not be yielding so much – but by then we will be in a different place altogether and will have cheaper energy for our homes.
If there were to be a funding shortfall for Energy For All, the government would simply have to speed up the insulation of homes and turn to cheaper forms of energy: renewables.
Q – Why would you offer a free supply of dirty, polluting energy?
A – Because that is the energy that is available now and people should not be dying for lack of it. Ways of changing the mix as fast as possible should be worked into the implementation of Energy For All in order to bring down both carbon emissions and energy prices. The interface of Energy For All with heat pumps, communal energy, solar panels, and gradual electrification of heat is an area that needs to be explored by people expert in this field, and we look forward to working with them.
Q – What about other solutions?
- Government paying towards bills: Tempting as a solution. However, what does it mean to the fossil fuel industry for the state to pick up the tab when they put their prices beyond the reach of their customers? What is to stop them just increasing the prices more? The industry believes they have us over a barrel. What gas and oil extractors are charging internationally has nothing to do with their costs. They are simply treating supply and demand as if it were a law of nature, and deciding that since they can put prices up, they therefore will do so. In the end, state payments of this type become another fossil fuel subsidy, albeit through the medium of our bills. In addition, the sums involved rarely do more than take the edge off the increases, if that.
- Holding down prices e.g., via the energy price cap, with the State picking up the difference, reducing or eliminating VAT on fuel: These proposals have the same problem as above, in subsidising fossil fuels. But they are also regressive: they will help high energy users on high incomes more than low users on low incomes. The cap must be retained – it’s all the protection we have at the moment. But it is not an alternative to Energy For All. A reduction in VAT is a move towards more, not less, regressive taxation when there is massive scope for tax policy to move in the opposite direction.
- Nationalisation: We strongly believe that energy is too important to be in private hands. The industry should be owned and run by the public, whether that is in the form of nationalisation, local cooperatives, or both. Taking energy into public hands would clearly make it much easier to switch from the current perverse energy market to Energy For All. Conversely, the demand for Energy For All, along with demands for de-privatisation, will help those campaigns. Nationalisation is rightly popular, but there is a remaining suspicion that a nationalised industry will be the same old same old, under different ownership. Combining it with Energy For All would transform that.
- Increasing and extending the Warm Home Discount: This has recently been increased (by £10 a year, to £150) and extended to some, but taken from some others with disabilities. The Warm Homes Discount is progressive, and it is not a fossil fuel subsidy: it is a redistribution of costs among customers from richer to poorer. It just doesn’t go anywhere near far enough. Energy For All would be such a redistribution, but on a much bigger scale.
Whilst they can sound appealing initially, social tariffs have a range of problems, which vary with different schemes.
They generally mean big savings for big users, whilst those in dangerously underheated homes are often given less help. Judging people’s needs based on how much energy they have used in the past is intrinsically unfair and positively dangerous. Many people who need a lot of energy have used very little because they cannot pay for it. That doesn’t mean they should be deprived in the future!
Eligibility is a big issue. People in great need often miss out completely because they don’t fit the specific criteria chosen. Income £1 too high, or variable due to self-employment, or incorrect government data, or flawed disability assessments, or any of the other well-known problems! And some people don’t claim the benefit – which is a huge issue with pension credit. Overall, we don’t trust the government to solve these many complex challenges any time soon.
Cliff-edges. Some schemes offer big discounts e.g. 50% to some whilst giving 0% to someone earning £1 more per year, which is obviously totally unfair.
Lack of energy security. They provide zero guarantee for those suffering from energy starvation and underheating their homes. A discount is not much use if you don’t have the money to benefit.
Lack of energy efficiency incentive. Discounts encourage high energy usage and undermine energy efficiency improvements.