LONDON (Parliament Politics Magazine) – According to a committee of MPs, ministers must provide greater cost-of-living assistance payments as energy costs are predicted to increase even further this winter.
They claimed that financial assistance for the poor and vulnerable needed to be adjusted to cater for rising bills in October.
The Business Committee was informed by witnesses that if they thought things were bad now, they hadn’t seen anything yet.
Its study also referred to Ofgem as “incompetent” as an energy regulator. Ofgem claimed to be putting a lot of effort towards market reform.
Revision of the policy
In recent days, the first £326 instalment of payments to help with the growing cost of living has been distributed to millions of low-income people receiving benefits.
Later in the year, more payments will be made, including £400 off of everyone’s household energy bill as well as increased assistance for the elderly and disabled.
Those payments were introduced at a time when an increase in the average energy bill of £800 was predicted; according to Ofgem, this estimate is now too low. Influential market analyst Cornwall Insight has projected an increase of more than £1,200 annually starting in October, bringing the average bill to £3,244 a year in October and then to £3,363 annually starting in January.
A typical bill now costs around £2,000 per year, up from an increase of £700 per year in April.
The Business Committee reports, the government’s assistance programme no longer suffices.
The report shows the effects of the energy price crisis on households are expected to result in an intolerable spike in fuel poverty and misery this winter.
The government needs to improve its assistance right away, focusing it on consumers who are low-income, fuel-poor, and in vulnerable situations. They also need to come up with a plan to help customers who are in these situations pay off their energy debt more quickly.
For months, the committee has been hearing from specialists, ministers, and business insiders.
If you thought things were bad now, you hadn’t seen anything yet, said the committee chair, Darren Jones.
No national government could control inflationary pressures around the world, but they had introduced an extraordinary package of support to help households, the Department for Business, Energy, and Industrial Strategy stated.
Ofgem’s failures
A number of other recommendations were made in the comprehensive report, including:
- taking into account the implementation of affordable, social tariffs for the most vulnerable
- enabling users of prepayment metres to pay for energy after consumption as opposed to before
- implementing a “far-reaching” insulation programme in UK homes
Members of the Business Committee join MPs of the Public Accounts Committee in harshly denouncing the role that regulator Ofgem played in enabling providers to establish and run without enough oversight. It claimed that the emphasis was placed too heavily on competition.
Due to the failure of 29 companies, 2.4 million consumers were switched to other providers, frequently at higher prices, and one significant supplier, Bulb, is currently under special administration.
The report stated that over the previous decade, Ofgem has demonstrated incompetence as the regulating authority of the energy retail market.
It permitted suppliers to enter the market without verifying that they had access to adequate finance, acceptable business strategies, and were managed by people with the necessary expertise.
A spokesperson for Ofgem said that the regulator had been open and transparent in stating that its own regime and suppliers had not been sufficiently strong.
No regulator can, or should, promise that businesses won’t fail in a competitive market, but they were working hard to change the entire system in addition to closely monitoring and holding individual energy suppliers to account with an intention to strengthen the regulatory routine further, he added.
