New data has predicted that Kevin McCallister would have racked up a £66.19 (or $80.65) energy bill in his three days Home Alone if the film was set in 2022.
Although it was released 32 years ago, in many ways, Home Alone is a timeless classic. However, if you’ve started your Christmas movie marathon already this year, you may be shocked by the HUGE amount of electricity that young Kevin McCallister uses in his time ‘Home Alone’.
In light of the cost of living crisis, researchers at interiors brand, Bobbi Beck, have analysed the film to estimate how much money Kevin’s escapades would cost his parents if the film was set in the modern day:
The Bill
Researchers calculated that Kevin McCallister would have used at least 472.22kwh of energy in his three days left Home Alone. Based on the average residential electricity rate in his hometown of Chicago (Source: EnergyBot), Bobbi Beck predicts that Kevin’s energy bill would be AT LEAST $80.65 (or £66.19).
For context, in the UK, the average daily energy bill is around £2.70 (Source: Uswitch).
It is estimated that Kevin would have spent almost FIVE TIMES more than the average in his local area of Chicago, where the typical daily energy bill is $4.57 (Source: Energy Sage).
The Setup
How did Kevin rack up such a huge energy bill? We know that Kevin is alone for a total of three days (Source: IMDB) in a huge Chicago house, with six bedrooms and six baths (Source: Zillow). The house is apparently 4,243 square feet on a lot over half an acre in size (Source: Realtor).
Kevin uses a lot of electricity in his various schemes, from heating up the doorknob with an electric barbeque lighter to using a record player and toy train track to mimic a party.
However, the most significant energy usage comes from the lights, both indoors and outside. During the infamous booby trap scene, we can see that every single light is on, but Kevin does turn them off when he leaves for church (Source: Youtube).
To calculate Kevin’s energy bill, Bobbi Beck investigated three areas of electricity usage: outdoor lights, indoor lights and TV use.
Outdoor Lights
The data estimates that Kevin would have used £7.57 (or $9.22) on outdoor lighting alone if the film was set in 2022. With each side of the house stretching around 20 meters, around 10 sets of lights would be required, guzzling an estimated 54kwh for the three days (Source: Simply LED).
Indoor Lights
Kevin spent an estimated £58.59 (or $71.39) on indoor lighting. Researchers calculated that his home is 2.49 times bigger than an average U.S. house, meaning that they would have an estimated 99.60 lights inside (Source: Visual Capitalist).
The lights are likely to be an older, less energy-efficient model, most likely 100W in the estimation of Bobbi Beck’s researchers. They use 0.1kw an hour (Source: Ideal Home) and, because an average eight-year-old boy sleeps for around 10 hours (Source: Sleep Foundation), the lights would be on for roughly 42 hours. Therefore, Kevin would use 418kwh on indoor lights.
TV Use
Although it’s only a minor cost, researchers also uncovered that Kevin would have spent just 3p (or 4¢) on TV use. One of the most memorable Home Alone scenes sees Kevin watching a gangster film. He has a TV that is typically less energy efficient than a plasma and uses about 100 Watts of electricity (Source: Scientific American). An average film lasts 2 hours and 10 minutes (Source: Statista), so the gangster film alone would use up 0.217kwh.
James Mellan-Matulewicz, CEO of luxury wallpaper brand Bobbi Beck commented: “Most of us are currently feeling the impact of the cost of living crisis, with energy costs and food prices soaring. Not only does this impact our day-to-day finances, but it can also change our perspective on things – and Christmas movies are no exception …
“Home Alone is arguably the best Christmas movie of all time, particularly well known for its spectacular festive interiors. But when watching the film back, the amount of electricity that Kevin uses is really shocking! That’s why we wanted to crunch the numbers to find out just how much money he would have cost his parents in his three days of chaos.”
“We investigated Kevin’s lighting and TV usage to find that his energy bill would have been at least $80.65 for three days – that’s £66.19 in pounds. His TV use only cost a measly 3p, whereas his indoor lights have racked up a £58.59 bill. Given the average daily electricity bill in the UK is £2.70, it’s really shocking to see how much energy he used!”
These calculations were released by luxury, sustainable wallpaper brand Bobbi Beck, which provides a number of wallpaper designs to suit a range of tastes and personalities.
There are now an estimated 860,000 fuel-poor households in Scotland following the latest increase in energy bills on 1 October
As more and more people across the country continue to worry about the cost of living, Zero Carbon Buildings Minister Patrick Harvie wants people living in Edinburgh to know that free impartial advice and financial support is available to help make home energy improvements.
Home Energy Scotland’s ‘Warmer Homes Scotland’ programme could provide funding of up to £5,000 to help support homeowners in Edinburgh to make their homes warmer, greener and more efficient to heat. This latest Scottish Government campaign aims to raise awareness of the support available to tackle energy bills and fuel poverty.
Commenting on the launch of the Home Energy Scotland 2022/23 campaign, Zero Carbon Buildings Minister Patrick Harvie said: “Many people across the country including Edinburgh continue to worry about the cost of living crisis and the big rise in energy bills caused by surging gas prices.
“Our latest estimates indicate that there are around 860,000 fuel-poor households in Scotland, of which 600,000 will experience extreme fuel poverty, following the latest increase in energy bills on 1 October.
“We are making sure that anyone in Edinburgh worried about or struggling to pay their energy bills can get the right support and advice.
“Our Home Energy Scotland service, delivered by the Energy Saving Trust, provides free and impartial advice, support and funding to help households in Scotland to better insulate their homes saving on energy costs while at the same time reducing their impact on the environment.
“The Home Energy Scotland team are on hand to advise how our Warmer Homes Scotland programme could provide funding of up to £5,000 to help make your home warmer, greener and more efficient to heat.
“A range of measures – big and small – to improve energy efficiency around your home are likely to be available, and I’d urge all households to find out more and get advice as soon as possible.”
Chancellor urged not to pass on costs to struggling households
The UK Government is being urged by the devolved governments to fund its cap on energy prices through a windfall tax, not higher borrowing.
In a joint letter to the new Chancellor of the Exchequer Kwasi Kwarteng (below), Deputy First Minister John Swinney is joined by Finance Ministers from Wales and Northern Ireland in calling for more targeted support to those impacted the most by the cost of living crisis.
They express their concern that more action is needed to prevent further hardship for households and businesses and say support “should be funded by targeting the windfall gains in the energy sector rather than passing on the cost through higher borrowing”.
The Finance Ministers also call for additional funding to support vital public services in the face of rising prices, energy costs and wage pressures as devolved settlements are worth considerably less in real terms than last October when they were set.
The joint letter reads:
Dear Kwasi,
We want to jointly congratulate you on your new role as Chancellor of the Exchequer. We are committed to working constructively with you and the new UK Government. A productive working relationship will be essential to tackle the economic crisis facing our citizens, communities and businesses.
We wrote to your predecessor on 15 July outlining our considerable concerns with the worsening economic situation in the UK including the cost crisis, funding for public sector pay and the impact of inflation on the Devolved Governments’ budgets. Our letter has been included as an annex here.
The Prime Minister’s announcement of 8 September limiting increases in energy bills will alleviate some of the anticipated additional pressures on households and businesses. However, it is important to recognise that overall this is an expensive package of measures that does not target support to those who need it most. We are deeply concerned at who will bear the brunt of these costs. Support should be funded by targeting the windfall gains in the energy sector rather than passing the cost to households through higher borrowing.
Looking ahead to your forthcoming fiscal statement, we urge you to focus efforts on those most impacted, not just relying on blanket interventions which do not recognise the scale of hardship particular households are facing. An extended and targeted support package needs to be provided to help those who, even with the cap, are facing the impossible choice between heating their homes and feeding themselves and their loved ones. Even with the price cap, energy costs are still double what they were last year.
In addition to households, early clarity and additional support is also required for businesses and the third sector, who are facing substantial challenges. The current measures provide businesses with only a temporary respite and little certainty to help them plan for the future. Many organisations would be forced to close if they are not supported.
Ministers in the Devolved Governments have exhausted the options available to us to address the cost crisis, stretching every pound available to us to provide support. The main levers that can make a difference are held by the UK Government and it must now take urgent steps to use these to provide much needed certainty to those suffering hardship and poverty.
The crisis has also resulted in a major squeeze on funding for public services and increases in demand. Additional funding is urgently needed to support our vital public services in the face of rising prices, energy costs and wage pressures, alongside unforeseen pressures. Based on recent inflation and widespread inflationary expectations for the next year or two, our respective three-year spending review settlements are worth considerably, potentially billions, less in real terms than when we received them last October.
Further, Russia’s unprovoked invasion of Ukraine has resulted in many Ukrainians seeking safety across the UK, however it is necessary to increase the funding available to support them here. In particular, there is a lack of parity in the funding available for those arriving under the Ukraine Family Scheme and the Ukraine Sponsorship Scheme, which cannot be right. ‘Thank You Payments’ to host families should also, in line with Lord Harrington’s recommendation, be doubled to ensure that those who have opened their homes to Ukrainians do not lose out financially as a result.
We would welcome early engagement and clarity on planned fiscal events to enable us to set out the implications for the devolved nations and effectively plan our own budgets, which are significantly impacted by UK spending and tax decisions.
Collaborative working between the UK Government and the Devolved Governments in a spirit of mutual respect would be of benefit to all of us.
Given that, now overdue, action is required to tackle the crisis we propose a quadrilateral meeting with the Chief Secretary to the Treasury as soon as possible and in advance of the FISC to agree the immediate steps that must be taken to tackle this issue and support households, businesses and the public sector.
This letter has been copied to the Chief Secretary to the Treasury and the Secretaries of State for Scotland, Wales and Northern Ireland.
Yours sincerely,
John Swinney BPA/MSP
An Leas-phrìomh Mhinistear agus Ath-shlànachadh Cobhid, Riaghaltas na h-Alba
Deputy First Minister and Cabinet Secretary for Covid Recovery, Scottish Government
Rebecca Evans AS/MS
Y Gweinidog Cyllid a Llywodraeth Leol, Llywodraeth Cymru
Minister for Finance and Local Government, Welsh Government
Energy price hikes will cause ‘stress, anxiety, illness, debt and death’
Today (26 August) Ofgem has announced the energy price cap will increase to £3,549 per year for dual fuel for an average household from 1 October 2022.
This comes as Ofgem’s CEO warns of the hardship energy prices will cause this winter and urges the incoming Prime Minister and new cabinet to provide an additional and urgent response to continued surging energy prices.
The increase reflects the continued rise in global wholesale gas prices, which began to surge as the world unlocked from the Covid pandemic and have been driven still higher to record levels by Russia slowly switching off gas supplies to Europe.
The price cap, as set out in law, puts a maximum per unit price on energy that reflects what it costs to buy energy on the wholesale market and supply it to our homes. It also sets a strict and modest profit rate that suppliers can make from domestic energy sales. However, unlike energy producers and extractors, most domestic suppliers are currently not making a profit.
The price cap protects against the so called ‘loyalty premium’ where customers who do not move suppliers or switch to better deals can end up paying far more than others. Ultimately, the price cap cannot be set below the true cost of buying and supplying energy to our homes and so the rising costs of energy are reflected in it.
Although Ofgem is not giving price cap projections for January because the market remains too volatile, the market for gas in Winter means that prices could get significantly worse through 2023.
Jonathan Brearley, CEO of Ofgem, said:“We know the massive impact this price cap increase will have on households across Britain and the difficult decisions consumers will now have to make. I talk to customers regularly and I know that today’s news will be very worrying for many.
“The price of energy has reached record levels driven by an aggressive economic act by the Russian state. They have slowly and deliberately turned off the gas supplies to Europe causing harm to our households, businesses and wider economy. Ofgem has no choice but to reflect these cost increases in the price cap.
“The Government support package is delivering help right now, but it’s clear the new Prime Minister will need to act further to tackle the impact of the price rises that are coming in October and next year.
“We are working with ministers, consumer groups and industry on a set of options for the incoming Prime Minister that will require urgent action. The response will need to match the scale of the crisis we have before us. With the right support in place and with regulator, government, industry and consumers working together, we can find a way through this.”
Ofgem will continue to work with government, consumers groups, charities and suppliers, in supporting any new package of help or measures to ease the crisis.
Ofgem has also today strengthened the rules around direct debits to ensure suppliers set them at the right level, meaning that customers only pay exactly what they need to. The changes will stop suppliers from building up excessive customer credit balances and using them in a risky way as working capital.
Ofgem’s clear role is to protect consumers, and it has also today:
Strengthened requirements for suppliers to have sufficient control over the key assets they use to run their businesses. Together, this and the direct debit rule changes build on existing requirements to boost supplier resilience to better protect customers from costs associated with supplier failures.
Extended the Market Stabilisation Charge (MSC), which is paid by suppliers and helps protect customers from the cost of supplier failure.
Extended the ban on acquisition only tariffs which ensures all energy tariffs are available to existing as well as new customers, ensuring all consumers can get a fair deal on their energy.
Launched a review into the mechanism and level of profit margin available under the price cap to ensure that suppliers do not earn excessive profits and receive only a fair return for the services they provide to customers.
The new price cap level will take effect from 1 October 2022, but it is possible some suppliers may begin increasing direct debits before this date to spread costs. Customers worried about when their direct debit will increase should contact their supplier. Any money taken from customers to build up a credit will only ever be spent on their energy supply and customers can ask for their credit balance to be returned at any time.
Anyone worried about paying their bill should contact their supplier in the first instance. They are obliged to discuss payment plans and direct customers to government and third sector support where available. Ofgem is tightly monitoring suppliers’ performance in this area and has told all suppliers now is the time to step up their support for customers, especially those on low incomes or in a vulnerable situation.
Ofgem continues to monitor the impact of the price cap and to work with stakeholders and government on what more can be done for those least able to pay but most in need of energy.
When the new Prime Minister announces what additional support packages will be available, Ofgem will continue to examine how best it can help those groups of people that need it the most.
Reacting to today’s announcement by Ofgem, Poverty Alliance director Peter Kelly said: “The first moral duty of government is to protect people and provide them with security. The UK Government and Ofgem are failing badly in that duty and acting without any sense of compassion and justice.
“This massive price hike is in line with predictions. Ministers knew this was coming for months but have put nothing in place to prevent a humanitarian disaster.
“We must be clear. Bills of this size will be completely and utterly unaffordable for people on low incomes, many of whom have already been struggling with cuts to social security and huge wage squeeze for years and years. They will cause stress, anxiety, illness, debt and death.
“The UK Government must act now. It is simply not right that they continue to dither – prices must be frozen and targeted support must be put in place to help those most in need.”
Chancellor of the Exchequer, Nadhim Zahawi said:“I know the energy price cap announcement this morning will cause stress and anxiety for many people, but help is coming with £400 off energy bills for all, the second instalment of a £650 payment for vulnerable households, and £300 for all pensioners.
“While Putin is driving up energy prices in revenge for our support of Ukraine’s brave struggle for freedom, I am working flat out to develop options for further support. This will mean the incoming Prime Minister can hit the ground running and deliver support to those who need it most, as soon as possible.”
He later told the public to cut back their energy consumption – this from the man who once claimed parliamentary expenses for heating his stables!
This morning, Ofgem announced that the energy price cap will rise by 80%, taking typical household bills from £1,971 a year to £3,549 a year on 1 October.
People will rightly be worried by these huge price hikes. These eye-watering increases will simply be unaffordable for households up and down the country.
We’re demanding the government increase its support package for every household to at least £1,000, with extra support for the most financially vulnerable, or risk pushing millions of households into financial distress this winter. We also expect energy suppliers to ensure their customer service centres are adequately resourced to resolve queries quickly and help those struggling to pay their bills.
THE Government needs to spend £100 billion to freeze household energy prices for a year, according to an industry expert.Derek Lickorish, chairman of retailer Utilita Energy, told GB News: “Back in the banking crisis, Gordon Brown found £500 billion pounds to stop the banks falling apart and I’m advocating that we’re looking at about £100 billion to freeze prices for one year.
“At the moment, we don’t know what Liz Truss is bringing to the party and we don’t know whether it’s going to meet the size of the gap.
“While we have a price cap , when we get to the first of January, that figure is going to have a five in front of it, and it’s going to be another couple of thousand pounds and people cannot possibly afford to pay that amount of money for their energy bill.”
Speaking to Alastair Stewart on GB News, he added: “I think the area that needs to be looked at quite closely is the market structure, in terms of the way electricity is bought and sold, and I know there are plans to look at this now with some urgency.
“But you have a situation where you’re bringing on to the network power that has been effectively subsidised by the renewables obligation, yet they are getting these huge prices in terms of generation because the market price is set by gas.
“The wind doesn’t cost any more. The sun doesn’t cost any more. But these schemes are making an awful lot of money.
“To be fair, that’s about solutions that were brought in prior to 2017, so there was a change so that renewable projects from 2017 would get the price that they agreed.”
Asked to make a final point, Mr Lickorish said: “I want the Government to tell us what’s happening and it needs to be a very, very big number that we need to know now.
John Redwood MP, who has been tipped for a post in a new administration, suggested that VAT on energy will be scrapped for businesses when a new Prime Minister is in place.
“Cancelling VAT on fuel, at least temporarily while fuel costs are elevated, is a serious runner and any new government team will want to look at that,” he told Liam Halligan on GB News.
“I certainly agree with you that there are a lot of businesses under a lot of pressure and I think that must be part of a comprehensive package to explain to industry what help might become available.
“And what can be done about the excessive fuel bills that will directly now lead to some closures, as we’ve heard recently.”
Commenting on the energy price cap rise announced today, Crispin Truman, chief executive of CPRE, the countryside charity, said: ‘This winter’s energy bills are a ticking time bomb threatening to blow apart household finances.
“Rural areas, where wages are lower and homes often cost more to heat, will be devastated if the full force of the price rises are felt by consumers. The government must step in to prevent those living in the countryside from having to choose between eating and heating this winter.
‘We’ve been here before in the pandemic – the country is entering a national crisis that requires an emergency response. Ministers must urgently put in place direct financial support to get people through the winter, while working to deliver the only viable long term solution – improving the energy efficiency of our homes.
‘In addition to stratospheric energy bills, the cost of living crisis is being driven by a lack of housing and soaring rents for millions in the private rented sector. Homelessness is rising as half a million people languish on social housing waiting lists. In the Eden district of Cumbria, homelessness rates are more than four times what they were in early 2020.
‘Twiddling with taxes won’t cut it. To ease the cost of living crisis the government needs to provide immediate monetary support. To prevent a generation of rolling winter crises, we need to get off gas and rapidly invest in home insulation and cheap renewable energy. A longer term fix must also include providing many more social and affordable homes.’
The Scottish Government, energy companies and advice organisations met at Bute House yesterday (Tuesday 23rd August) for a summit chaired by First Minister Nicola Sturgeon – but it’s the UK Government that will have to act to head off a financial crisis for families across the country.
During the meeting a consensus emerged around next steps that must be taken by the UK Government, and where further work and action will take place between energy companies, advice organisations and the Scottish Government ahead of a follow up meeting next month.
The First Minister said: “Any further increase in energy bills in October will have a profound impact on households, businesses and the public sector already struggling with the cost crisis.
“No single government, company or organisation can solve this crisis alone. It requires a collective response commensurate to the situation and the Scottish Government is now treating this situation as a public emergency.
“There was clear consensus at today’s summit that energy customers simply cannot be expected to carry the burden of further price rises in October, and that the UK Government must now commit to freeze the cap for all households and to support the energy companies to deliver that.
“This meeting was focussed on practical solutions, but without action by the UK Government to address the problem at source, the actions we discussed can only ever mitigate the impact of such dramatic price rises at the edges.
“I am grateful to energy suppliers and our third sector partners for coming to the table today and for committing to work together with the Scottish Government to develop further action and practical steps to help households and businesses through the cost crisis.”
The consensus reached in the meeting was that the UK government should:
Immediately cancel any further energy price increase for domestic consumers, and work with the regulator and energy companies to put in place the funding to support this;
Provide significant additional support to help households and businesses meet current energy bills and the impact of inflation more generally;
Take action to protect small and medium sizes businesses, and other organisations not covered by the price cap, from rising energy costs;
Reform the energy market for the longer term to prevent this situation occurring again in the future.
The following actions to mitigate the current situation were also agreed and will be developed further:
Energy companies will pursue all possible options to provide enhanced support to consumers who are in difficulty, including working with advice agencies and government to improve the support available to consumers, and protect customers from disconnection. It was agreed that the energy companies will work with the Scottish government over the next two weeks to agree a package of measures;
The Scottish Government will provide additional support to advice agencies and consider, as part of its emergency budget review, further support for households and businesses. It will also undertake a public information campaign to promote energy efficiency measures alongside sources of help and support for those in difficulty;
This group will reconvene following the announcement by Ofgem of the new price cap on Friday 26th August and the appointment of a new Prime Minister to determine further specific actions.
The First Minister will convene an urgent summit with energy supply companies and consumer groups later this month, to discuss how advice and support for people struggling with energy bills can be improved.
The summit will consider what collective action can be taken by government, energy companies and the third sector to help businesses and consumers access advice, and get support with debt issues.
Scotland’s major energy suppliers including Scottish Power, OVO Energy, Centrica, Octopus and E.ON, as well as industry bodies and key consumer and poverty organisations will attend.
The summit follows last week’s meeting of the Scottish Government Resilience Committee on the cost living crisis and will take place ahead of OfGem’s next energy price cap announcement on 26 August.
First Minister Nicola Sturgeon said: “I know that this is an incredibly unsettling time for households and energy consumers across Scotland and the Scottish Government will continue to do everything we can to support those affected.
“There is a not a single solution to this problem and government, industry and the third sector in Scotland needs to work collaboratively together to ensure the right support is in place for householders and businesses during this challenging winter. This could include improving the availability of help and advice and considering a more compassionate approach to debt management.
“However, it remains the case that the powers and resources needed to tackle this emergency on the scale required – access to borrowing, welfare, VAT on fuel, taxation of windfall profits, regulation of the energy market – lie with the UK Government.
“Only the UK Government can access and make available resources on the scale required. They need to take action, now. As I said last week, a first step would be to cancel the energy price cap rise this autumn.”
Peter Kelly, Director, The Poverty Alliance said: “We are pleased that the First Minister will be convening this summit of energy companies, along with the Poverty Alliance and Energy Action Scotland.
“Across the country, people are increasingly being swept up amid a rising tide of hardship. But with the energy price cap due to increase in October, that tide threatens to become a flood.
“Households up and down Scotland are terrified of what the colder months will bring and the likelihood is that – without further action – lives and life chances will be at risk. The situation could scarcely be more urgent.
“But it is a situation we can do something about, by taking action to protect people most at risk of poverty and deeper hardship. It is that much-needed and urgent action that we are hoping the summit can bring about.”
Frazer Scott, CEO of Energy Action Scotland said: “With our colleagues at the Poverty Alliance, we welcome the First Minister’s intervention in gathering energy companies together to talk about how we can best support households struggling to afford spiralling energy bills.
“Fuel poverty will affect over one million Scottish households this winter requiring urgent intervention focussed on targeting those most in need.
“Cold, damp homes affect health and wellbeing and will put thousands of lives at risk as well as adding additional pressure to the NHS, making this a vital intervention for Scotland.”
The Scottish Government estimates that 906,000 or 36% of all households will be in fuel poverty in October 2022, based on an Ofgem price cap of £2,800 and taking into account previously announced government mitigations.
New report calls on Government to update its energy bills support to help the most exposed households and consider introducing a social tariff.
Negligent energy regulator Ofgem enabled now bankrupt energy firms and inexperienced CEOs to increase energy bills further.
A national homes insulation programme is the permanent solution to bringing down bills and should be launched urgently.
The Government should immediately update its package of support to help households with soaring energy bills before the cost-of-living crisis grips even harder following October’s energy price cap increase, according to a new report by the Business, Energy and Industrial Strategy Committee.
It comes as people are feeling the squeeze of 40-year high inflation of 9.4% – to which the cost of energy is a big contributor – as wage increases struggle to keep up.
Support package out of date
The Government’s Energy Bills Support Scheme provides a £400 discount on energy bills in October for every household, a £650 means-tested one-off payment to eight million low-income households, £150 for those on disability benefits and £300 for pensioners. This was designed when the forecast for the October price cap was £2,800.
With wholesale energy prices continuing to rise industry experts now estimate that the price cap could increase to £3,244 in October, when the NEA forecast one in three (8.2 million) households face fuel poverty. A further rise is expected in January and MPs on the Committee warn that the size of the package has been ‘eclipsed by the scale of the crisis’.
Social tariff and support for vulnerable people
They also raise concerns that the current scheme does not sufficiently target low-income households and those in vulnerable circumstances, with the £400 discount going to some bill payers who don’t need it and repeatedly to people who own multiple homes. The Committee urges the Government to ensure that any update to its support scheme is better targeted at customers who need it the most.
As low-income households struggle to pay their energy bills and get deeper into debt, MPs call on the Government to work with energy suppliers to develop a scheme to help households pay off debts over a longer period.
In the longer-term, the report calls out the injustice of vulnerable people, who are unable to pay their energy bills, being moved on to more expensive prepayment meters.
The report labels this as “unacceptable” and urges the Government to consider replacing the market-wide price cap with a discounted social tariff for vulnerable customers, and a relative tariff for the rest of the market – that caps the difference between the cheapest and most expensive tariffs a supplier offers.
Committee Chair Darren Jones said, “Once again, the energy crisis is racing ahead of the Government. To prevent millions from dropping into unmanageable debt it’s imperative that the support package is updated and implemented before October, when the squeeze will become a full-on throttling of household finances and further tip the economy towards recession.
“We were told by a number of witnesses, ‘if you think things are bad now, you’ve not seen anything yet’. This Winter is going to be extremely difficult for family finances and it’s therefore critical that public funds are better targeted to those who need it the most.
“It’s an injustice that the poorest households continue to pay higher energy costs because they’re on prepayment meters. This must end and a social tariff should be brought forward.
“Ultimately, Ministers know that the long-term solution is to reduce our need for energy through insulation works that keep our homes warm in winter and cool in summer. If the Government is really taking this energy crisis and the country’s net zero targets seriously it will come forward with a bold, fully funded, national home insulation program before the end of the year.”
This could increase if the Government is unable to recover the cost of running the special administration of Bulb through its sale and decides that billpayers must pick up the costs, something the report says should be paid for through general taxation.
Ofgem’s incompetence over many years enabled inadequately resourced and inexperienced founders to start energy companies. It failed to supervise regulated companies, which in turn took high risk decisions including not hedging properly and using customers money to offer unsustainable prices that undercut well run energy companies. Ofgem failed to use its existing powers and didn’t bring action against energy suppliers even when it was clear that they should have done.
Ministers and regulators believed deregulation would drive competition, but it instead left an over- exposed and unregulated market which ultimately crashed, costing taxpayers billions of pounds. This market failure is only comparable to the banking crisis of 2008, according to MPs.
Ofgem is pressing ahead with a major package of regulatory reform to reverse its previous shortcomings and shore up the financial resilience of the market, but the Committee remains sceptical of Ofgem’s ability to undertake this task. If measures are poorly designed and executed, they risk further destabilising the market and distorting competition.
Insulating homes to permanently reduce demand
Helping customers pay their energy bills is not a sustainable position for Government and volatile gas prices are expected to be a longer-term concern for the country. It is therefore urgent and essential that Ministers bring forward a fully funded, national campaign to insulate people’s homes – street by street, community by community – in order to reduce the country’s demand for energy.
This report urges the Government to stop announcing short-term policies and moving existing budgets around and instead fully fund a national retrofit programme that businesses, homeowners, and tenants can invest and take part in.
Such a programme is required not just to reduce the cost of energy in winter but to also keep homes cool in extreme heat, reduce the cost of cooling as well as heating, and help the country hit its net zero targets as set out in the Committees previous report on Decarbonising heating in homes
Edinburgh Pentlands MSP Gordon Macdonald has welcomed the planned introduction of the new Low Income Winter Heating Assistance benefit to help households both across the Edinburgh Pentlands constituency and the wider city pay their energy bills.
The support is being introduced by the SNP Scottish Government and will guarantee an annual payment of £50 to around 400,000 low income households from February 2023.
It replaces the UK government’s Cold Weather payments which were only triggered during a ‘cold spell’ of seven consecutive days below zero degrees, whilst the new payment from the Scottish Government will provide a reliable, stable guaranteed payment in winter, no matter the weather.
It will be the thirteenth social security payment introduced by the SNP Scottish Government and will be only available in Scotland.
Commenting, Gordon Macdonald said: “The SNP Scottish Government is providing a guaranteed payment of £50 to low-income households across Edinburgh to help pay their energy bills every winter, starting in February 2023.
“Once again the SNP Scottish Government is stepping up to support households within its limited budget, and despite the majority of powers lying with the Tories at Westminster.
“The Scottish Government’s annual £20m investment will mean households will get an automatic payment. The UK Cold Weather payments only reached 11,000 households in 2021/22.
“As the Scottish Government continues to step up and provide support to households across Scotland, it does so with one hand tied behind its back by the UK Tory government.
“That is why it is only with the full powers of independence can we start to build a fairer, more equal country.”
