London Energy Costs

Meeting:

Mayor's Question Time

Date:

Wednesday, 20 November 2013

Reference:

Question 2013/4097 (Oral)

Main question

Murad Qureshi

What have you done to insulate Londoners from the impact of another round of double-digit price rises by 'the big six'?


Answer

The Mayor

Thank you, Murad.  You are asking about the huge energy price increases by the big six.  There is a very interesting thing going on in Britain, which is that the gas prices are in fact quite low per unit and the consumption is very high.  What we are doing to cut the costs is, of course, we have already retrofitted 99,000 homes in London, saving homeowners up to about £180 per year.  We continue to try to advise people through know-your-rights campaigns and everything else about how they can minimise their energy costs and how they can pay their energy bills most efficiently.

 

Murad Qureshi (AM):  I hear what you are saying, Mr Mayor, but the keyword in the question was “insulate” and what you have done to help Londoners face the cost of living crisis this winter.  You mentioned your own programme of the home energy efficiency, the RE:NEW programme, but it delivered well below its own targets last term.  We have had the energy companies reneging on their eco obligations, particularly in London, and it is clear that they will not be doing anything further on that front if you listen to EDF, particularly.  The national Green Deal programme has become a bit of a joke with only 219 properties getting eco works done nationally.  I just want to know: have you done anything to dissuade the energy companies against these crippling price increases and to make sure the energy companies undertake their obligations in London in particular instead of sending light bulbs?

 

Boris Johnson (Mayor of London):  Yes.  For instance, with British Gas and other energy companies, we are making sure that they spend their eco funds on helping us to insulate Londoners and we have a further 60,000 homes in the pipeline and 500 public sector buildings additionally trying to reduce the energy bills overall.  Right at the beginning in my oral update, I pointed out that we have a programme now with Islington to capture excess heat and help about 500 homes across the city.

 

Murad Qureshi (AM):  That is TfL.  That is not an energy company, Mr Mayor, with all respects.

 

Jennette Arnold OBE (AM):  It is Islington’s own energy company.

 

Murad Qureshi (AM):  OK.  That is the local authority, not one of these six energy companies ‑‑

 

Boris Johnson (Mayor of London):  No, it is TfL.

 

Murad Qureshi (AM):  You are just going off the point here, Mr Mayor.  Can I just point out another reality on fuel poverty?  The reality is a 1% increase in energy prices nationally pushes 40,000 households into fuel poverty.  If you look at the cold homes crisis and results from 2011/2012, we had 2,800 excess winter deaths in London.  Do you have at all a ballpark figure of the number of families in fuel poverty at this present moment?

 

Boris Johnson (Mayor of London):  I can certainly say that just off the top of my head I think there are probably 180,000 elderly people anyway in London who face that problem.  It is very acute and I understand the difficulty people face.  I think it was John Major [former Prime Minister] the other day who made this point very vividly.  Some families are facing a real crisis.  These energy companies face very considerable increases in their green responsibilities and their green taxes and ‑‑

 

Murad Qureshi (AM):  I am not asking you that question, Mr Mayor.  I am actually asking what you are doing.

 

Boris Johnson (Mayor of London):  I can tell you what we are doing.  We are retrofitting tens of thousands of homes.  We are continuing to run very big know-your-rights campaigns and we are trying to help Londoners to access the funds they need to get them through the winter.  I in no way underestimate the scale of the problem.

 

Murad Qureshi (AM):  According to figures for 2011 from the Office of National Statistics, we have 300,000 households in fuel poverty and that is about 10% of London households.  You can imagine how much that is going to increase now with these crippling increases.

 

I also want to be clear with the John Major comments, actually.  Only this week, you were prepared to get out of bed to defend the super-rich in your column in the Telegraph, yet you do not seem to be prepared to beat up the energy companies.

 

Boris Johnson (Mayor of London):  Do not be ridiculous.

 

Murad Qureshi (AM):  EDF has done very well out of the Olympics and all the marketing they had.  They operate like a private utility here and when they go across the Channel they would not dare do the things they do here in the UK in France.  I suggest ‑‑

 

Boris Johnson (Mayor of London):  I would beat up anybody but ‑‑

 

Murad Qureshi (AM):  I have not finished my question, Mr Mayor.  I suggest you actually support John Major’s suggestion of a one-off windfall tax on excess properties and energy companies because there are families in London choosing between heating and food on the table.  That is the reality for many tens of thousands of households in London this winter.

 

Boris Johnson (Mayor of London):  I understand that and certainly, if there was an easy way of doing this, I would.  What I do not think is credible is for Labour people to argue that energy companies are now charging too much when they festooned those companies with regulation, when they piled tax upon tax, when they saw a huge reduction in the number of energy suppliers ‑‑

 

Murad Qureshi (AM):  I would rather see it be done on their profit margins than the general taxation bill for Londoners.

 

Boris Johnson (Mayor of London):  ‑‑ and they now claim to be able to somehow magically cut the bills.  That is not credible.  In London, we face a shortage of electricity substations.  We face a serious shortage of power.

 

Murad Qureshi (AM):  You are going to be supporting their price hikes for the future?

 

Boris Johnson (Mayor of London):  We need to keep investing in our energy supply.  Otherwise, quite frankly, you can have a quick fix.  You can have a quick Wonga-like fix.

 

Murad Qureshi (AM):  You are going to accept their crippling price increases for the foreseeable future?

 

Boris Johnson (Mayor of London):  Murad, you can have a Wonga-like fix, but then the bills will go up in the future.  I think you have to look at some of the ways the energy companies have been regulated.  You have to look at the decisions that were taken to spend vast sums on totally pointless or only marginally useful wind farms over thirteen years.  You did absolutely nothing to tackle the problems of supply.

 

Murad Qureshi (AM):  Chair, I have made my point.  I did not want to go into supply issues.

Boris Johnson (Mayor of London):  If you do not have enough supply, you cannot expect the energy to be produced at a reasonable price.  That was the fundamental problem that Labour failed to tackle because you did not have the guts to go and build the nuclear power stations 20 years ago that this country needs.  You fudged the issue year after year and we are reaping the whirlwind now.


Supplementary Questions - 1


Navin Shah

 

Mr Mayor, do you think the big six companies are right to blame the green levies for the latest round of price rises proposed on Londoners?


The Mayor

I think they are right.  I refer you to what I said just now.  The mistakes have been legion in our energy policy in the last 20 years.  They have been led by Labour inertia and failure to grip the issue.  We are now seeing a shortage of supply, which is inevitably impacting the prices people are paying.  If I could, I would build energy generators across London to try to meet the need we have.  Indeed, we are putting one of the TfL power stations back in use if we possibly can.

 

Navin Shah (AM):  Mr Mayor, is it not true that those companies first blamed wholesale prices but, even when the wholesale prices fell, they did not take down the costs for customers?  Do you know what the actual cost of the green levy is on the household bills?  Can you tell us?  Do you have a figure for what it actually costs in terms of additional costs from green levies?

 

Boris Johnson (Mayor of London):  What is unquestionably true is that we have inadequate power supplies and we have an energy industry that has been endlessly belaboured with new requirements and new green taxes of one kind or another.  That feeds through into the bills that the public are paying.  The way to bring them down is not just to berate the energy companies, which is a good idea and I am not against that.  If you want to shout at the energy companies, fine.  What you can also do is you can insulate people’s homes and reduce their consumption.  As I began by saying in my answer to Murad, we have quite low gas prices per unit by comparison with the rest of Europe.  It is our consumption that is so high.

 

Navin Shah (AM):  Mr Mayor, you have not answered my question.

 

Boris Johnson (Mayor of London):  I am answering your question.  The answer is to concentrate on that.

 

Navin Shah (AM):  Mr Mayor, the fact is that an average householder cost for a dual fuel bill is about £1,247.  Of that, the wholesale energy cost is 47%, the other suppliers and their margins are 19%, whereas the cost of energy, including climate change policies, is only 9%.  The question I would like to put to you is: what impact will scrapping green levies have on your RE:NEW home insulation programme and carbon reduction targets?  Surely, if you are serious about your own strategy, for these green levies, it is essential that they carry on.  It is not at all ‑‑

 

Boris Johnson (Mayor of London):  You are in favour of more green levies?

 

Navin Shah (AM):  Green levies as they exist are viable and they are part of the whole strategy.

 

Boris Johnson (Mayor of London):  Sure, but let us ‑‑

 

Navin Shah (AM):  What would be the impact?  Answer my question.

 

Boris Johnson (Mayor of London):  It is vital and the green levies are not the only way we do this.  We use all sorts of means to fund the RE:FIT and the RE:NEW campaigns.  You have to retrofit people’s homes.  As I say, we have done 99,000 already.  You have to retrofit public buildings as well.

 

Navin Shah (AM):  How are you going to do it without the levies if you are going to scrap those?  If you agree with the big six, where you will find the tax from?

 

Boris Johnson (Mayor of London):  No, I am very confident we could get on with our retrofitting programme without the levies that you describe.

 

Navin Shah (AM):  Let me just ask you a final question.  The energy companies are calling the shots, very clearly.  The Government is doing nothing about it.  Do you really think it is right for EDF to hold consumers as hostages unless they get what they want?  Is this right?

 

Boris Johnson (Mayor of London):  The problem, as I have said, Navin, is that you in the Labour Party did not address the issues of supply of energy for a long ‑‑

 

Navin Shah (AM):  Can you address my question?

 

Boris Johnson (Mayor of London):  I am addressing your question.

 

Navin Shah (AM):  This is not a matter of what the Labour Party did or did not do.

 

Boris Johnson (Mayor of London):  You will remember, though, Navin.

 

Navin Shah (AM):  You answer my question.

 

Boris Johnson (Mayor of London):  We need to get on and insulate people’s homes.  We are doing that.  I think we need to accelerate it.  We need to do many, many tens of thousands more homes.  What I do not think is credible ‑‑

 

Navin Shah (AM):  Mr Chairman, he is not answering my question.  Could he stop here, please?

 

Boris Johnson (Mayor of London):  That is the way to reduce people’s energy bills.  What I do not think is credible is to confiscate cash from the energy companies and expect them somehow miraculously to invest in the new plant that this country needs and the new generationof Londoners require.