Ending the energy rip-off means breaking the big six deadlock

Nick Clegg’s direct mail initiative for cheaper tariffs is welcome, but only a complete rethink of t

There are few more demoralising sensations in life than the feeling of being ripped off. And when the product or service is something that you simply cannot live without, the sense of futility and frustration is all the more acute.

Public anger over skyrocketing consumer bills running parallel with the huge profits and executive bonuses of the Big Six energy companies – EDF, E.ON, British Gas, Southern, Scottish Power and npower – is growing.

The amount we pay for our power seems set on a never ending trajectory upwards. Average annual household bills for gas and electricity rose from £600 in 2004 to around £1,200 in 2011. USwitch has predicted that by 2020, this could rise to a massive £3,202.

For many people hit by the perfect storm of job losses, frozen wages and rising living costs, the situation is becoming desperate. As many as 6 million British households are now thought to be living in fuel poverty, with around 3,000 premature winter deaths attributed to the impact of living in damp, cold and leaky homes.

OFGEM and DECC figures show that the driving factor behind the price hikes has been the rising wholesale cost of gas and the fluctuating costs of other fossil fuels, underscoring the urgent need for a move towards renewable energy and ambitious energy efficiency.

But to add insult to injury, the Big Six actually appear to be increasing their profit margins on each bill. Last October, OFGEM warned that profits on dual fuel deals had increased by 733%, from £15 per household to £125.

Meanwhile, the Institute for Public Policy Research has found as many as 5.6 million people may be being overcharged as a result of Big Six pricing policies which also, it believes, prevent new companies from gaining a foothold in the market.

Indeed, despite OFGEM’s mandate to create a truly competitive energy market, nearly two decades after privatisation, the profiteering Big Six still control more than 99% of the retail market.  

To my mind, this is now about completely changing the behaviour of those operators and making it easier for new actors to enter the market. It is also about rethinking the way we produce energy in order to secure a more affordable and sustainable power supply.

So when the Deputy Prime Minister announced this week that he had struck a deal with the energy companies requiring them to send a once yearly letter to consumers with information about the cheapest tariffs, it felt like a monumental anti climax.

That’s not to say it isn’t a welcome development. Government proposals to simplify the confusing and complex range of tariffs which have often resulted in customers switching to a worse deal – and for customers to be offered the best tariff if their contract comes to an end – are well overdue, as are plans to give OFGEM powers to direct the energy companies to compensate overcharged consumers.

But reading this, I was struck by the fact that energy companies were not already obliged to do those things. With an estimated seven out of 10 people still not on the best available tariff, it seems the Big Six have been ripping customers off for far too long.

In February, I joined with Compass to help launch a campaign to End the Big Six Energy Fix – nearly 9,000 people have since signed the online petition calling for change.

We are appealing for an independent public inquiry into the energy industry, in the same way that that we had an Independent Commission on Banking led by Sir John Vickers and an investigation into the media by Lord Leveson, to get to the root causes of the problem.

In order to address the market failure and ensure that the energy companies pay a premium for their privileged market position, the campaign is also calling for a windfall levy on profits – with the money raised, together with revenues from environmental taxes, being channelled into energy efficiency programmes and demand reduction initiatives.

Because although the Government seems finally to be waking up to the potential of measures such as cavity wall insulation, loft lagging and condensing boilers, the Green Deal policies that are supposed to make these happen are weak and underfunded. Serious initiatives to reduce overall energy demand are still worryingly thin on the ground.

Furthermore, rather than tinkering around the edges with mail outs and barcodes on bills, we should be making it easy for communities and councils up and down the UK to generate their own energy – reducing consumer dependence on the Big Six.

The forthcoming Electricity Market Reform, albeit deeply flawed and overly complex, should in theory make it easier for smaller operators to enter the energy market. But this is far from certain, and the current proposals largely ignore the vast potential of community energy.

The Government should be doing far more to localise and decentralise the sector, drawing from best practice in countries like Germany where community ownership of the grid has played a pivotal role in allowing renewables and energy efficiency to flourish.

Here in Britain, where the grid is privately owned and controlled, people are far removed from energy generation and have little knowledge of where our energy comes from. Yet in Germany, citizens see themselves more as owners and generators of their energy, not just consumers.

With the right political will and ambition, we can create an energy sector which genuinely serves the interests of the people and protects the planet. But only by curbing the power of the Big Six, increasing transparency around bills, and investing in renewables, efficiency measures and demand management that will ultimately help wean us off fossil fuel addiction, can this become a reality.

Caroline Lucas is MP for Brighton Pavilion and Co-Chair of the All Party Parliamentary Group on Fuel Poverty

Energy: the rising costs, Getty images.

Caroline Lucas is the MP for Brighton Pavilion.

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Is defeat in Stoke the beginning of the end for Paul Nuttall?

The Ukip leader was his party's unity candidate. But after his defeat in Stoke, the old divisions are beginning to show again

In a speech to Ukip’s spring conference in Bolton on February 17, the party’s once and probably future leader Nigel Farage laid down the gauntlet for his successor, Paul Nuttall. Stoke’s by-election was “fundamental” to the future of the party – and Nuttall had to win.
 
One week on, Nuttall has failed that test miserably and thrown the fundamental questions hanging over Ukip’s future into harsh relief. 

For all his bullish talk of supplanting Labour in its industrial heartlands, the Ukip leader only managed to increase the party’s vote share by 2.2 percentage points on 2015. This paltry increase came despite Stoke’s 70 per cent Brexit majority, and a media narrative that was, until the revelations around Nuttall and Hillsborough, talking the party’s chances up.
 
So what now for Nuttall? There is, for the time being, little chance of him resigning – and, in truth, few inside Ukip expected him to win. Nuttall was relying on two well-rehearsed lines as get-out-of-jail free cards very early on in the campaign. 

The first was that the seat was a lowly 72 on Ukip’s target list. The second was that he had been leader of party whose image had been tarnished by infighting both figurative and literal for all of 12 weeks – the real work of his project had yet to begin. 

The chances of that project ever succeeding were modest at the very best. After yesterday’s defeat, it looks even more unlikely. Nuttall had originally stated his intention to run in the likely by-election in Leigh, Greater Manchester, when Andy Burnham wins the Greater Manchester metro mayoralty as is expected in May (Wigan, the borough of which Leigh is part, voted 64 per cent for Brexit).

If he goes ahead and stands – which he may well do – he will have to overturn a Labour majority of over 14,000. That, even before the unedifying row over the veracity of his Hillsborough recollections, was always going to be a big challenge. If he goes for it and loses, his leadership – predicated as it is on his supposed ability to win votes in the north - will be dead in the water. 

Nuttall is not entirely to blame, but he is a big part of Ukip’s problem. I visited Stoke the day before The Guardian published its initial report on Nuttall’s Hillsborough claims, and even then Nuttall’s campaign manager admitted that he was unlikely to convince the “hard core” of Conservative voters to back him. 

There are manifold reasons for this, but chief among them is that Nuttall, despite his newfound love of tweed, is no Nigel Farage. Not only does he lack his name recognition and box office appeal, but the sad truth is that the Tory voters Ukip need to attract are much less likely to vote for a party led by a Scouser whose platform consists of reassuring working-class voters their NHS and benefits are safe.
 
It is Farage and his allies – most notably the party’s main donor Arron Banks – who hold the most power over Nuttall’s future. Banks, who Nuttall publicly disowned as a non-member after he said he was “sick to death” of people “milking” the Hillsborough disaster, said on the eve of the Stoke poll that Ukip had to “remain radical” if it wanted to keep receiving his money. Farage himself has said the party’s campaign ought to have been “clearer” on immigration. 

Senior party figures are already briefing against Nuttall and his team in the Telegraph, whose proprietors are chummy with the beer-swilling Farage-Banks axis. They deride him for his efforts to turn Ukip into “NiceKip” or “Nukip” in order to appeal to more women voters, and for the heavy-handedness of his pitch to Labour voters (“There were times when I wondered whether I’ve got a purple rosette or a red one on”, one told the paper). 

It is Nuttall’s policy advisers - the anti-Farage awkward squad of Suzanne Evans, MEP Patrick O’Flynn (who famously branded Farage "snarling, thin-skinned and aggressive") and former leadership candidate Lisa Duffy – come in for the harshest criticism. Herein lies the leader's almost impossible task. Despite having pitched to members as a unity candidate, the two sides’ visions for Ukip are irreconcilable – one urges him to emulate Trump (who Nuttall says he would not have voted for), and the other urges a more moderate tack. 

Endorsing his leader on Question Time last night, Ukip’s sole MP Douglas Carswell blamed the legacy of the party’s Tea Party-inspired 2015 general election campaign, which saw Farage complain about foreigners with HIV using the NHS in ITV’s leaders debate, for the party’s poor performance in Stoke. Others, such as MEP Bill Etheridge, say precisely the opposite – that Nuttall must be more like Farage. 

Neither side has yet called for Nuttall’s head. He insists he is “not going anywhere”. With his febrile party no stranger to abortive coup and counter-coup, he is unlikely to be the one who has the final say.