Tweet Fuel poverty is a real problem, and it is one which an increasing number of families are facing. It is no surprise to see politicians competing with each other to offer 'solutions', nor to see newspapers competing to criticise the situation. What is a surprise, though, is to see such a high degree of consensus suggesting that the 'problem' is to do with the price of fuel and that the 'solution' is therefore to find ways of reducing it.
For the Tories, in particular, such an approach seems to go against their usual belief in the ability of the market to set prices; not so long ago the idea that any government should intervene in the price-setting process would have been complete anathema to them.
It's true, of course, that the range of tariffs available is both large and confusing; it has become increasingly difficult to work out which tariff is the best one for any particular customer. Whether that's a 'problem' or simply a 'feature' of a market in which suppliers are trying to compete whilst retaining customers and profits is a matter of opinion.
It's also true that energy prices in general have gone up significantly in recent years, increasing the number of people falling into the category labelled 'fuel poverty'. But whilst large and increasing profits may have played a part in that - blaming the energy companies is a sport that we can all play - it's not the whole truth. Energy is a commodity of which a rapidly developing world is demanding every greater quantities, at a time when the extraction of some fossil fuels is becoming more expensive and when decarbonising the economy should be an environmental priority. In environmental terms, using price to reduce consumption is not as entirely bad a thing as one might think from reading recent coverage.
Insofar as there is a pricing problem, it seems to me that it is partly a result of the way in which those who use the least pay the highest unit price; the worst excesses of energy wastage are happening as a result of usage by those who can afford the lower unit price they are often paying. Adjusting tariffs so as to reverse that situation might be one useful adjustment to pricing which could be done without resorting to full-scale price regulation.
However, it is the other side of the equation, the one which is getting ignored, which interests me. If people can't afford to buy the quantity of energy which is necessary to ensure a basic level of heating, then isn't it at least a possibility that the 'problem' is as much to do with incomes as it is with prices? We have a very unequal - and becoming more unequal - distribution of income; wouldn't fixing that long term problem be preferable to trying to manipulate prices to provide relief in the short term?
Gwynoro’s life story video 6 – Home life early 1950’s. - *How did he learn English?* *First TV and First Car* The first TV in the village bought after his mother's father received compensation from an accident i...
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