£200 Energy Bill Discount?

I’ve not really been keeping up with the news too much of late, all I know is that Boris Johnson has still not resigned. Unbelievable.

I received the following Whatsapp over the weekend;

“There is something very wrong about this ‘loan’ from the energy sector:
‘RE: imposed £200 loans for energy bills. Thanks to Richard Else – I have just reworked and generalised a message he has written to his energy provider and to the Cabinet Office (and I’ve cc’d my MP, who is in the Treasury)… Feel free to copy, adapt and send to suit your purposes… ‘

“To whom it may concern,
With regards to the recent news that all customers of energy companies in England will be given a £200 loan from the Government to be repaid over following years.
I would like to state that I do not want this loan. I have not asked for this loan and I certainly do not want the government interfering in my finanical affairs. I do not wish my energy company to transfer the loan to my account, nor take repayments from my account in the future, and I shall be writing to them to this effect.
I have several reasons for this decision.

  1. I have not given the Government permission to provide me with a loan. Legal requirements within the Consumer Credit Act require both the lender and the applicant to accept the written terms and conditions relating to specific transactions. I have not received contractual paperwork and would not sign an agreement, should I be provided with one. Without such an agreement, I believe the imposition of a compulsory loan would be unlawful.
  2. Since the most vulnerable in society are much more likely to be using pre-payment meters for their energy supplies, this loan scheme is completely misguided. Such people do not receive or pay bills, so cannot be helped through this proposed plan. Please reconsider and change this.
  3. Since I am a customer on a fixed rate tariff my unit costs for energy will not rise in April when the government removes its cap. Therefore I do not need a loan to help me.
  4. Within my contractual agreement with my energy company, there is no reference to the provision of credit from third parties without the consent of the customer. If the government continues with this course of action, it could cause contractual problems for the energy companies.
    This imposition is of great concern.
    For the Government to create a situation where they can enforce financial debt upon citizens, then control their personal finances – through their energy account – to repay a debt they have neither wanted nor authorised, is a worrying authoritarian development in the relationship between the state and the citizens of this country.”

Okay, if any of this is true, it’s quite troubling, so I immediately forwarded it onto a friend and tagged at the end that it looks like I need to read about the proposal and his response was;

“You do, I think that covers it.
It’s also a loan that is forced to play the market.
And it’ll be managed by who?”

This is starting to sound a little sinister.

Some reading reveals that the discount is in actual fact a loan for £200 which will be applied to this years bill as a credit to the account, and then be repaid at £40/year from 2023 to 2027.

The process is that the UK government loans the money to the energy suppliers, and they distribute it from there.

The reason for this is that energy bills will be going up for users on standard rate variable tariffs from April 2022 to the tune of 54% if you are on an account or prepay meter.

You have absolutely no say as to whether you have the loan or not, it will be applied to your account regardless; the loan is being forced upon you. If you do not have an energy account, i.e. you are on a prepay meter, you will receive a voucher or cheque.

If you don’t currently have an energy bill of your own, such as you’re living with parents and you miss receiving the loan, if you then move out and into your own place, you will then have to make the repayments at the £40/year between 2023 and 2027 for the loan that you never had!

There are so many questions bouncing around in my head, I just cannot think of where to start.

I think the best point is to look at other European countries. The jump in energy prices is affecting the entire continent, so what are the governments doing there?

In France, the government is forcing EDF to limit the increase to 4% this year, this means the company will take a financial knock to the tune of around £7bn. I’d say that this was fairly effective at protecting the consumer.

In Spain, the government there is applying a windfall tax on the electricity and gas producers that doing rather well out of the escalation in prices to distribute to people in need. How this manifests itself and how the consumer will be benefit will need to be seen.

In Germany, their government has cut green surcharges on bills. This is a start.

And in the UK……the government indebts the population, regardless as to whether they want the money or not, and will recover the money from them, whether they have had it or not.

And the amount of money that we are talking about is a paltry £200. This will barely touch the jump in bills for this year alone.

So, the energy producers and suppliers in the UK will continue to be allowed to make huge profits from something that is essentially costing them the same as it did before the increase in prices, and to add insult to injury, most are foreign owned and the suspicion is that they are using the profits from their UK operations to subsidise their home ones.

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