Energy bill rises wrong, PM says

It is "wrong" for energy firms to increase their bills when wholesale prices are "not going up substantially", the Prime Minister has said.

807d4b68-3d45-11e3-9723-0a0c0223000020131025T155019
David Cameron said it was vital to look at the causes for rising energy bills

It is "wrong" for energy firms to increase their bills when wholesale prices are "not going up substantially", the Prime Minister has said.

But David Cameron said it was vital to look at the causes for rising bills and stressed that his attempts to control the cost to households would be "transparent" after indications that some green levies could be shifted to general Government expenditure.

His comments came as f uel poverty campaigners demanded that party leaders act on the ''national crisis'' of cold homes.

The UK is second only to Estonia among European nations for the number of people who are struggling to pay their energy bills, according to research by the fuel poverty alliance Energy Bill Revolution.

The figures emerged as the Government urged people to use their heating this winter as part of a plan to prevent some of the thousands of avoidable deaths that occur each year.

At a press conference in Brussels, Mr Cameron was asked if the energy giants were "morally wrong" to increase their costs, following rises by four of the Big Six firms.

Mr Cameron said: "On power bills I think it is wrong for bills to go up when wholesale prices are not going up substantially, but we have to look at the causes of why bills are going up and act on those causes rather than just have some sort of blanket policy that doesn't work.

"That's why I've identified, of the four parts to a bill - you've got the wholesale prices, the transmission costs, the green taxes and charges, and then you've got the profits that the companies are making - it's those last two where we need action.

"So, on the profits you need more competition, you need more challenge, I want more companies in that sector, I want the competition in the market properly reviewed every year, and we will have that.

"On the green charges, yes, we should be trying to roll the cost of those back, in the best way that we can because that is one of the things that has been adding to bills in recent years."

Deputy Prime Minister Nick Clegg said he would not allow all green levies to be axed following the PM's surprise announcement earlier this week that he would take action on the environmental charges which were driving up energy bills by an average £112 per household a year.

The Liberal Democrat leader told BBC Radio 2's Jeremy Vine: "Removing all the levies is an incredibly bad idea and I would never support it.

"It's certainly not an idea which this coalition Government is going to put forward."

He added: "I'm certainly not giving people advice on what to wear and what to do with their own thermostats."

The Prime Minister insisted that any action the Government took on green levies would be done in a transparent fashion and repeated his assertion that Ed Miliband's pledge to freeze bills if he won power in 2015 was a "con" because no politician could prevent fluctuations in the oil and gas markets.

"What matters is getting to grips with the causes of things that are causing the bills to rise," he said.

"That must be done in an open and transparent way, so that if you end what's causing the charge to rise that's transparent, if you move a charge from a bill to somewhere else that's transparent.

"What is a con is saying 'I'm going to cap energy prices' when actually you're not doing anything to deal with the reason why they are increasing."

He said the British public are " basically very smart and they know that energy bills can go up when the world price of oil and gas goes up".

Mr Cameron said: "They know that no politician has control of that. But if you can explain to people 'here's why bills are going up and we are going to act on those things in a transparent and open way that you can see', I think that is the right thing to do and I think people will understand that."

Official advice issued by Public Health England (PHE) says people should keep their homes warm, with living room temperatures of 21C (70F) and bedrooms and the rest of the house heated to 18C (65F).

It says temperatures above this ''may waste money'' but below this ''may risk your health''.

If people are unable to afford to heat all their rooms, they are advised to heat their living room during the day and bedrooms just before going to bed.

Campaign group Energy Bill Revolution, which includes Age UK, Barnardo's, Consumer Futures and National Energy Action, has told political leaders that investment in ''super insulation'' for the nation's homes is the only way to end the ''scourge'' of fuel poverty and the best way to bring down energy bills.

It said ''woeful'' levels of insulation have led to Britain's homes falling ''way behind'' those of comparable European countries such as Sweden, Germany and the Netherlands.

The alliance said the wholesale cost of gas in the UK was much lower than in most European countries but households paid much higher bills due to the amount of heat lost from homes.

There are more than five million UK households living in fuel poverty, defined as spending more than 10% of their income on energy.

The Energy Bill Revolution warned party leaders that by focusing on ''short-term solutions'' to the energy bill crisis, such as price caps, windfall taxes and cutting green subsidies, they were ''ignoring the only way to truly solve the energy bill crisis''.