Friday, 12 September 2008

Better off pay for energy efficiency

Insulating your loft can be a hazardous affair. Gordon Brown appeared to put a foot through the ceiling yesterday as he scrambled to prevent an escape of voter warmth over soaring energy prices.

The Prime Minister denied it and Britain's big six power companies sought to play down the idea, but the truth is that most of the £910 million cost of the Government's new fuel poverty scheme will ultimately be shouldered by consumers in the form of higher gas and electricity bills.

While nobody would argue against the merits of improving energy efficiency, it would be naive to believe that this money can be rustled up out of thin air.

The Government has simply created an additional cost for power companies - which they will try their utmost to recoup.

They will pass on as much of the expense as they can, either by raising prices again next year by more than they might otherwise have done - or, in the event of a future fall in wholesale prices, by delaying price cuts for longer.

The scheme will thus be paid for by those wealthier households who won't quality for the benefits.

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