Letter: Giving the Poorest and Most Vulnerable Extra Money is Better Than an Energy Price Cap

Published on: 5 Sep, 2022
Updated on: 4 Sep, 2022

From: Mark Bray-Parry

Guildford Green Party spokesperson

In response to: We Should Cap Energy Prices

Anthony Mallard mistakes the UK energy supply arms of British Gas/EDF/etc, with their much larger (and profitable) parent companies.

Let’s be clear about this point: no one is proposing freezing the price cap and forcing the energy suppliers to cover the cost because, just as we saw with Bulb, the UK energy suppliers will not survive the losses and will collapse.

What the Lib Dems and Labour are proposing with a price cap freeze is the government giving £42 billion to energy suppliers to subsidise the cost of wholesale energy in return for keeping the price cap at its current level.

The UK Government had minimal control over the short-term wholesale price of energy. All it can do is support households either by subsidising bills (VAT cut, subsidising wholesale cost) or giving money directly to households/businesses (note that this was the proposal in my letter, not boosting income via wage growth).

It should also be noted that a price cap freeze only supports households, not businesses. It is also projected to save the average household £1,000 but is very regressive since poorer households typically consume less energy and so will see less of the savings.

For the same cost, we can give every household £1,000, every household with universal credit £2,000, every pension household £2,000, and every business that was eligible for small business/Covid rates relief £10,000, and it would still be cheaper than the Lib Dem proposal.

This approach would mean the poorest and most vulnerable get most support, and small businesses are supported.

To the point about the French energy market: France is much less exposed to the energy market as a result of building nuclear power stations decades ago which means not only has it allowed them to control 96 per cent of the domestic energy price but also produce an export worth £billions per year.

Meanwhile, the UK is very exposed to global fuel prices (as we are seeing now) because it did precisely the opposite, with consecutive governments failing to invest in renewables and nuclear (that includes Labour, Lib Dems, and the Conservatives).

This is an extremely complex subject and is not easy to resolve with letters. If anyone would like to reach out to me, I’d be more than happy to explain. I’m easily found on social media and more than happy for The Guildford Dragon to share my email address (m.bray.parry@gmail.com).