Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
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16 | 17TH - 23RD APRIL 2015 | UTILITY WEEK Lobby Election / Party conferences The last cut is the deepest The next parliament will be as much about saving money as this one was, with an annual £90 billion budget deficit still to deal with. The big parties agree that cuts of at least £30 billion are needed to balance the books, so questions about who pays loom large. This week's Lobby explores the problems and policies being put forward in the run-up to 7 May to address the affordability of energy and water for domestic and non-domestic consumers. T he latest statistics say that 2.28 million households are in fuel poverty (spend- ing more than 10 per cent of their dis- posable income heating their homes), while the Consumer Council for Water claims that one in five households feel their water bills are unaffordable. Labour leader Ed Miliband ignited the utility affordability debate with his 2013 conference speech, where he pledged to prevent price rises for energy bills, should he become the next prime minister. The shadow environment secretary, Maria Eagle, followed up the last year with a promise to create a national affordability scheme for water customers. The opposition has been trumpeting to "hard working families" that Labour can make bills more affordable and provide them with more help. The coalition partners, the Conservatives and the Liberal Democrats, lean towards a market-based approach. Competition will drive down energy prices, they say. As for the water sector, they rightly point out that Ofwat has already cut bills in real terms in its PR14 price review. The other area of ideological conflict sur- rounds energy efficiency. The Green Deal has largely failed, deliver- ing only half the number of plans originally envisaged, and even then aer substantial giveaways from the Department of Energy and Climate Change. The Energy Company Obligation (Eco) has delivered the bulk of energy efficiency measures, insulating more than 1.1 million homes in two years. However, pressure groups, and those in cold homes struggling to pay their bills, demand more. The next government will have to act to win these fuel and water poor voters over, by proving them with the sup- port they need, and reducing the size of the bills over the longer term. The promise of a better, warmer life with lower bills is one that will appeal to voters, but utility companies will be charged with picking up the workload when we emerge on the other side of polling day. "We understand the impact of rising energy costs on businesses, particularly in manufacturing. That's why we will fix the broken energy market, freezing prices for 20 months while we do so. This would save the average small business £5,000." Chuka Umunna, shadow business secretary (Lab) 6% £1,657 £26.5k Average household bill for energy and water Average wage in the UK Percentage of income the average household spends on energy and water "Energy-intensive industry have got special problems arising from British energy costs. The carbon price floor is pricing in a disadvantage to UK producers. We recognise that." Vince Cable, business secretary (Lib Dem)