British Gas last week announced a 35 per cent increase in domestic fuel costs, on top of increases earlier in the year; while Centrica its parent company and British oil majors Shell and BP revealed record profits. At the same time the number of households living in fuel poverty continues to rise, now expected to reach six million this winter.
Yet calls for a windfall tax miss the point. It could only help if the government passed money raised directly into long-term energy saving schemes like Warm Front, which it cut by 25% this year. A one off £50 increase in winter-fuel allowance, to £250 for the over 60s, is woefully inadequate, covering less than a fifth of the average increase in cost of a dual fuel contract.
The Treasury Select Committee learnt last month that the major cause of rising energy costs globally, is the reducing supply of oil and gas from stable parts of the world and increasing dependence on production from volatile areas. A windfall tax on British energy companies could add the UK to the list of unpredictable jurisdictions and make them less able or likely to invest in greater recovery techniques in the North Sea and in alternative renewable energy technologies.
The government dithered for 10 years over replacing nuclear capacity and building gas storage for the day when North Sea gas started to decline.
It now needs to act early before the summer nears its end and people, especially those most likely to feel the cold, reach to turn their heating on.
A Conservative government will introduce measures to end our reliance on large centralised providers, encouraging micro energy-generation where small providers, including homes and businesses can produce energy for their own use, using a variety of methods from combined heat and power, to hydro, wind and photovoltaic power.
