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Government outlines plans to cut energy bills 'by £50' Government outlines plans to cut energy bills by £50
(about 2 hours later)
The coalition government has outlined its proposals to reduce energy bills amid rising costs. The coalition has outlined its proposals to reduce energy bills by an average of £50 a year in an effort to offset rising costs.
Prime Minister David Cameron and his deputy, Nick Clegg, wrote in the Sun on Sunday that their plans would cut bills by an average of £50. Chancellor George Osborne said the government would pay for some measures currently included in people's bills, and the cost of insulating homes would be spread over a longer period.
They said the government would pay for some measures currently included in bills, and the cost of insulating homes would be spread over a longer period. This would "help families" and firms would comply with the changes, he said.
Labour said the plans remedied less than half of this year's £120 increase.Labour said the plans remedied less than half of this year's £120 increase.
It says it will freeze gas and electricity bills for 20 months if it wins the next election. Rising energy bills have become a major political issue in recent months, as the main political parties look to offer policies to reduce the squeeze on people's standard of living in the run-up to the next general election.
Discounts for poorest 'Insistent'
Mr Cameron and Mr Clegg wrote in the newspaper that the "two million poorest families who currently receive a discount on gas and electricity (under the warm homes discount) will continue to do so", but this would be funded by government instead of being included on energy bills. Labour says it will freeze gas and electricity bills for 20 months if it wins the next election, but the Conservatives and Liberal Democrats argue this is unrealistic because of the varying and unpredictable international costs of gas and other fuels.
It would be funded by extra tax money from cracking down on tax avoidance, they wrote. Speaking on BBC One's Andrew Marr Show, Mr Osborne said of his own proposal, to be set out in detail in Thursday's Autumn Statement: "This will help families... We've been in discussions with the energy companies."
That would reduce annual bills by approximately £12, the BBC understands. He added: "There's going to be an average of £50 off people's bills... We are absolutely insistent that this is going to be brought in."
And Mr Cameron and Mr Clegg confirmed that the cost to energy firms of insulating homes, "apart from in the worst-off homes," will be spread over four years instead of two. Mr Osborne said the change would be part-funded by extra tax money from cracking down on tax avoidance. That would reduce annual bills by approximately £12, the BBC understands.
Asked whether the energy firms would pass cost savings on to customers, Mr Osborne said: "I don't want to pre-empt what they are going to say in the next few days, but I'm clear that it's going to happen."
He attacked Labour leader Ed Miliband's promise of a price freeze as a "con", adding that the coalition had the "right approach" to cutting bills
Writing in the Sun on Sunday, Prime Minister David Cameron and his deputy Nick Clegg also confirmed that the cost to energy firms of insulating homes, "apart from in the worst-off homes," would be spread over four years instead of two.
They said these proposed changes to the "energy company obligation", reported by the BBC earlier this week, would reduce bills, but did not specify by how much.They said these proposed changes to the "energy company obligation", reported by the BBC earlier this week, would reduce bills, but did not specify by how much.
The Association for Conservation of Energy (ACE), which represents the insulation industry, said this amounted to halving large parts of the budget for insulation, previously projected by government to run at £1.3bn a year to 2022. Mr Cameron and Mr Clegg also said the government would pay for new incentives for people to insulate their homes.
The main casualty will be the expensive help for insulating solid walled homes that is currently offered to householders to save on their bills and cut carbon emissions. The primary focus will now be on the cheapest measures to achieve energy efficiency, such as roof and cavity wall insulation. In addition, landlords would be offered cash incentives to insulate their least energy-efficient properties between old tenants leaving and new ones moving in.
ACE estimates that the changes will cost 10,000 jobs in the insulation industry, mostly in small firms. The numbers are uncertain until full details of the policy become clear. But, for Labour, shadow chancellor Ed Balls, also appearing on the Andrew Marr Show, said the government was simply "shifting" costs "from energy bills to the taxpayer".
In their article the prime minister and his deputy also said the government would also pay for new incentives for people to insulate their homes. "That's not a help. It's just a shifting of the burden," he said.
They wrote: "Alongside the Green Deal, when you buy a new home, you could get up to £1,000 from government to spend on important energy-saving measures - equivalent to half the stamp duty on the average house - or even more for particularly expensive measures. "They are the government. They need to get a grip. Why are David Cameron and George Osborne running scared?"
"It's an all-round win: better insulation means cheaper bills; it's how we cut carbon emissions; and it will boost British businesses who provide these services." He added: "Anything they do is better than nothing. Shifting, though, from bills to taxes is giving with one hand and taking with the other."
In addition, landlords will be offered cash incentives to insulate their least energy-efficient properties between old tenants leaving and new ones moving in. The Association for Conservation of Energy (ACE), which represents the insulation industry, said the government's scheme amounted to halving large parts of the budget for insulation, previously projected by government to run at £1.3bn a year to 2022.
ACE said schemes already existed to help home-buyers and landlords, so it was possible that the government was re-announcing old policies. The main casualty would be the expensive help for insulating solid-walled homes that is currently offered to householders to save on their bills and cut carbon emissions. The primary focus will now be on the cheapest measures to achieve energy efficiency, such as roof and cavity wall insulation, ACE added.
Specific details of the plans will be announced by Chancellor George Osborne in his Autumn Statement in Parliament on Thursday. The organisation estimates that the changes will cost 10,000 jobs in the insulation industry, mostly in small firms, although its numbers are uncertain until full details of the policy become clear.
Mr Cameron and Mr Clegg also strongly criticised Labour in the article, saying the opposition's plan to freeze energy bills was "taking people for fools". Spokesman Andrew Warren said: "It beggars belief that the government is trying to cut energy bills by delaying a scheme that itself cuts energy bills.
"Energy companies would hike up prices both before and after the freeze - so families would end up paying more. "The government has been hoodwinked by the big six energy firms, who don't want to insulate people's homes because it means less profits for them."
"Not only that - by cutting investment in green energy, their freeze would threaten thousands of jobs," they wrote.
'Hoodwinked'
But shadow energy and climate change secretary Caroline Flint said energy bills were going up by £120 this winter alone, "never mind the £300 that bills have gone up by" since the government got into power.
It was "no surprise" that the government was not asking the energy companies to pay for the cut, she said.
"This shows why only a price freeze will do. Labour's price freeze would save money for 27 million households and 2.4 million businesses and our plans to reset the energy market would stop these companies from overcharging people in the future," she said.
Andrew Warren from association told the BBC: "It beggars belief that the government is trying to cut energy bills by delaying a scheme that itself cuts energy bills.
"The government has been hoodwinked by the Big Six energy firms, who don't want to insulate people's homes because it means less profits for them."
Mr Warren told BBC News there was a huge difference between the performance of the best and worst energy firms on insulation.
E.On - the only one of the big six energy companies in the UK that has not yet announced an increase in its tariffs this autumn - said it would wait for a formal statement from the government before commenting, "but we are pleased that steps seem to be being taken that will ultimately benefit our customers".E.On - the only one of the big six energy companies in the UK that has not yet announced an increase in its tariffs this autumn - said it would wait for a formal statement from the government before commenting, "but we are pleased that steps seem to be being taken that will ultimately benefit our customers".
EDF welcomed the plans and indicated it was not now likely to hike prices again before 2015.EDF welcomed the plans and indicated it was not now likely to hike prices again before 2015.
It said its "decision to hold back the full impact of rising costs" earlier this month by implementing a lower rise than competitors had been "validated by the confirmation that the government will take action on energy charges".It said its "decision to hold back the full impact of rising costs" earlier this month by implementing a lower rise than competitors had been "validated by the confirmation that the government will take action on energy charges".
"Customers should expect other energy suppliers to follow EDF Energy's lead by significantly lowering their prices," a spokesman said."Customers should expect other energy suppliers to follow EDF Energy's lead by significantly lowering their prices," a spokesman said.