The government rides to the rescue of the Big Six on the backs of the fuel poor

The planned cuts to the Energy Company Obligation will undermine the fight against fuel poverty.

The BBC reports today that the government is planning to cut annual costs of the Energy Company Obligation (Eco) in half as part of a package to reduce energy bills by £50. The Eco is more of a social policy than a carbon policy and is intended to tackle fuel poverty. Energy efficiency is the best long-term route to addressing rising bills since it permanently reduces energy demand. But the Prime Minister regards it as "green crap" so it is in the firing line in George Osborne's Autumn Statement.

By stretching the deadline from 2015 to 2017, and therefore halving ambition, the move means that around 40,000 homes who were entitled to free energy efficiency improvements will miss out this year and next. Equally worryingly, the Green Business Council estimates that 10,000 jobs will be lost as a result of the government's announcement. Until now, the policy had been a major driver of job creation all around the country.

The move also lets the worst performing companies off the hook. British Gas have only delivered up to 9% of the measures they were expected to carry out by March 2015 year while the best performer, E.ON, have done up to 74%. The former are being rewarded for coming bottom of the class.

This is not to say that there aren't problems with the scheme. At present, the policy is poorly targeted with only 20 per cent of measures going to those in fuel poverty. The remainder are received by low income households with relatively lower energy bills. In a major new report, IPPR proposes a new 'Help to Heat' scheme to tackle energy bills without lowering ambition on fuel poverty.

We propose a new 'house by house' approach of free assessments to determine whether households are in fuel poverty or not. Those that are would be entitled to free measures ensuring that 197,000 fuel poor homes were treated every year - up from 80,000 at present, or just 40,000 if the scheme is halved. Those that are not would receive an energy efficiency assessment - worth £120 - for free.

These households could use this information to take out a Green Deal loan and have energy efficiency measures installed. But as Newsnight highlighted last night, the government has achieved only 1 per cent of its target suggesting that, with interest rates of 8 per cent, the policy is failing. IPPR suggests using some of the Eco money to subsidise the cost of Green Deal loans turning it from a good deal to a great deal. It would cost the government just £16.7m to provide zero per cent loans for 200,000 households. These families and individuals would save £136 per year on their bills.

But all this looks like wishful thinking as the government have caved to the demands of the energy companies. Instead of improving its own policy, the government is riding to the rescue of the Big Six on the back of the fuel poor.

British Gas branding on the entrance to Leicester's Aylestone Road British Gas Centre. Photograph: Getty Images.

Will Straw is Associate Director at IPPR.

Dan Kitwood/Getty
Show Hide image

I believe only Yvette Cooper has the breadth of support to beat Jeremy Corbyn

All the recent polling suggests Andy Burnham is losing more votes than anyone else to Jeremy Corbyn, says Diana Johnson MP.

Tom Blenkinsop MP on the New Statesman website today says he is giving his second preference to Andy Burnham as he thinks that Andy has the best chance of beating Jeremy.

This is on the basis that if Yvette goes out first all her second preferences will swing behind Andy, whereas if Andy goes out first then his second preferences, due to the broad alliance he has created behind his campaign, will all or largely switch to the other male candidate, Jeremy.

Let's take a deep breath and try and think through what will be the effect of preferential voting in the Labour leadership.

First of all, it is very difficult to know how second preferences will switch. From my telephone canvassing there is some rather interesting voting going on, but I don't accept that Tom’s analysis is correct. I have certainly picked up growing support for Yvette in recent weeks.

In fact you can argue the reverse of Tom’s analysis is true – Andy has moved further away from the centre and, as a result, his pitch to those like Tom who are supporting Liz first is now narrower. As a result, Yvette is more likely to pick up those second preferences.

Stats from the Yvette For Labour team show Yvette picking up the majority of second preferences from all candidates – from the Progress wing supporting Liz to the softer left fans of Jeremy – and Andy's supporters too. Their figures show many undecideds opting for Yvette as their first preference, as well as others choosing to switch their first preference to Yvette from one of the other candidates. It's for this reason I still believe only Yvette has the breadth of support to beat Jeremy and then to go on to win in 2020.

It's interesting that Andy has not been willing to make it clear that second preferences should go to Yvette or Liz. Yvette has been very clear that she would encourage second preferences to be for Andy or Liz.

Having watched Andy on Sky's Murnaghan show this morning, he categorically states that Labour will not get beyond first base with the electorate at a general election if we are not economically credible and that fundamentally Jeremy's economic plans do not add up. So, I am unsure why Andy is so unwilling to be clear on second preferences.

All the recent polling suggests Andy is losing more votes than anyone else to Jeremy. He trails fourth in London – where a huge proportion of our electorate is based.

So I would urge Tom to reflect more widely on who is best placed to provide the strongest opposition to the Tories, appeal to the widest group of voters and reach out to the communities we need to win back. I believe that this has to be Yvette.

The Newsnight focus group a few days ago showed that Yvette is best placed to win back those former Labour voters we will need in 2020.

Labour will pay a massive price if we ignore this.

Diana Johnson is the Labour MP for Hull North.