We use less energy and pay more for it (55 per cent more)
Joe Wright, 12 March 2014
Energy prices and Labour’s cost of living crisis campaign seem to have lost some momentum in recent weeks. The party political has been overshadowed by more important events in Ukraine. It could also be that Labour don’t want to sound too much of a Debbie Downer during the release of yet more positive GDP figures.
However, the ONS released its survey of Energy prices last week, adding a little more historical context to the cost of energy faced by households today. The most astonishing figures are that between 2002 and 2012 household energy costs rose 55 percent. That might not be too surprising to many. But, at the same time, households have used on average 17 per cent less energy. Between being more aware of increasing prices, using energy saving light bulbs, or insulating roofs, families have cut back on consumption by almost a fifth. As the ONS points out, this means the 55 per cent – adjusted for inflation – can only be explained by large price rises alone.
2004 to 2009 saw the largest rise, with the largest hikes of 10 pounds per month coming between 2005-6 and 2008-9 (and during Ed Miliband’s tenure as Energy Secretary). Gas became particularly expensive during the last 10 years with a 56 per cent increase in prices – electricity went up 43 per cent. The jump in prices now means that less well-off people are spending nearly 11 per cent of their disposable household income on energy.
Scottish people also been relatively hard done by. They pay an average nine pounds more per month owing to the colder weather. But this is nothing compared to the Northern Irish who pay an average £154 compared to England’s £103. The ONS, in its typically removed tone ‘suggests’ this may be ‘Due to a relatively limited gas network…with only a single supplier operating in some areas’ – in other words Northern Ireland is good example of what happens in Energy markets more concentrated than the rest of the UK’s.
In this respect, Labour have been particularly clever in picking up on energy as they focal point of the cost of living campaign given. It works as marvellous Get Out The Vote incentive in traditional Labour regions – typically colder regions of the UK such as Wales, the North and Scotland – that have been hit hardest by energy costs.
Ed Davey has a real battle on his hands. Explaining the situation consumers face to the IPPR recently, he said:
In 2010, the Coalition Government inherited a retail market with: Too few competitors; A confusing plethora of tariffs; A distinct lack of transparency…
Between 2000 and 2010, the supply market contracted from 14 majors to just 6. Now in 2014, because reforms put in place by this Government and Ofgem, Labour’s Big 6 face 16 competitors.