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.

Photo: Getty
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The Prevent strategy needs a rethink, not a rebrand

A bad policy by any other name is still a bad policy.

Yesterday the Home Affairs Select Committee published its report on radicalization in the UK. While the focus of the coverage has been on its claim that social media companies like Facebook, Twitter and YouTube are “consciously failing” to combat the promotion of terrorism and extremism, it also reported on Prevent. The report rightly engages with criticism of Prevent, acknowledging how it has affected the Muslim community and calling for it to become more transparent:

“The concerns about Prevent amongst the communities most affected by it must be addressed. Otherwise it will continue to be viewed with suspicion by many, and by some as “toxic”… The government must be more transparent about what it is doing on the Prevent strategy, including by publicising its engagement activities, and providing updates on outcomes, through an easily accessible online portal.”

While this acknowledgement is good news, it is hard to see how real change will occur. As I have written previously, as Prevent has become more entrenched in British society, it has also become more secretive. For example, in August 2013, I lodged FOI requests to designated Prevent priority areas, asking for the most up-to-date Prevent funding information, including what projects received funding and details of any project engaging specifically with far-right extremism. I lodged almost identical requests between 2008 and 2009, all of which were successful. All but one of the 2013 requests were denied.

This denial is significant. Before the 2011 review, the Prevent strategy distributed money to help local authorities fight violent extremism and in doing so identified priority areas based solely on demographics. Any local authority with a Muslim population of at least five per cent was automatically given Prevent funding. The 2011 review pledged to end this. It further promised to expand Prevent to include far-right extremism and stop its use in community cohesion projects. Through these FOI requests I was trying to find out whether or not the 2011 pledges had been met. But with the blanket denial of information, I was left in the dark.

It is telling that the report’s concerns with Prevent are not new and have in fact been highlighted in several reports by the same Home Affairs Select Committee, as well as numerous reports by NGOs. But nothing has changed. In fact, the only change proposed by the report is to give Prevent a new name: Engage. But the problem was never the name. Prevent relies on the premise that terrorism and extremism are inherently connected with Islam, and until this is changed, it will continue to be at best counter-productive, and at worst, deeply discriminatory.

In his evidence to the committee, David Anderson, the independent ombudsman of terrorism legislation, has called for an independent review of the Prevent strategy. This would be a start. However, more is required. What is needed is a radical new approach to counter-terrorism and counter-extremism, one that targets all forms of extremism and that does not stigmatise or stereotype those affected.

Such an approach has been pioneered in the Danish town of Aarhus. Faced with increased numbers of youngsters leaving Aarhus for Syria, police officers made it clear that those who had travelled to Syria were welcome to come home, where they would receive help with going back to school, finding a place to live and whatever else was necessary for them to find their way back to Danish society.  Known as the ‘Aarhus model’, this approach focuses on inclusion, mentorship and non-criminalisation. It is the opposite of Prevent, which has from its very start framed British Muslims as a particularly deviant suspect community.

We need to change the narrative of counter-terrorism in the UK, but a narrative is not changed by a new title. Just as a rose by any other name would smell as sweet, a bad policy by any other name is still a bad policy. While the Home Affairs Select Committee concern about Prevent is welcomed, real action is needed. This will involve actually engaging with the Muslim community, listening to their concerns and not dismissing them as misunderstandings. It will require serious investigation of the damages caused by new Prevent statutory duty, something which the report does acknowledge as a concern.  Finally, real action on Prevent in particular, but extremism in general, will require developing a wide-ranging counter-extremism strategy that directly engages with far-right extremism. This has been notably absent from today’s report, even though far-right extremism is on the rise. After all, far-right extremists make up half of all counter-radicalization referrals in Yorkshire, and 30 per cent of the caseload in the east Midlands.

It will also require changing the way we think about those who are radicalized. The Aarhus model proves that such a change is possible. Radicalization is indeed a real problem, one imagines it will be even more so considering the country’s flagship counter-radicalization strategy remains problematic and ineffective. In the end, Prevent may be renamed a thousand times, but unless real effort is put in actually changing the strategy, it will remain toxic. 

Dr Maria Norris works at London School of Economics and Political Science. She tweets as @MariaWNorris.