Fuel Poverty and Tax Poverty – what Gord gives with one hand he takes with another

The government’s own “Fuel poverty” adviser has been on TV and radio telling us that we will have more people in fuel poverty this winter than at any time for the last ten years. Well, there’s a surprise! I wonder how much he and his staff get paid to come out with such obvious statements. If energy prices go up by a third or by half, and people’s incomes scarcely keep up with general inflation, of course more will find it difficult to pay the fuel bills. Apparently fuel poverty is when your fuel bill is more than 10% of your net income. They will also find it more difficult to pay the Tax bills, having to pay for all those fuel poverty advisers and civil servants workign out the figures. Fuel poverty should be set alongside food poverty, travel poverty, and TV poverty, when those things rise too high as a proportion of income, or alongside my favourite and the most common, Tax poverty.The truth is there is Poverty, pure and simple, and it’s getting worse thanks to this government’s failed economic strategy.

Of course I think it is worrying that many people this winter will fear both the fuel bills and the food bills. The recent price rises have hit those on low incomes and no incomes harder than those on higher incomes. But if you don’t want to call it simple poverty why not call it Tax poverty, for the 10 p tax band abolition hit many of those people very hard, as does the increased petrol tax and the prospective rise in VED on older cars. If they paid less tax, people on lower incomes would have more to pay for fuel.

We need not wonder why the Government’s Fuel Poverty expert was let loose on TV. It clearly means a benefit package is coming soon. The PM is preparing a benefit pay out to people struggling with fuel bills, to show he is in touch and cares. No worry that the nation cannot afford any more public spending. No surprise if it has to be paid for out of increased borrowing rather than from making savings elsewhere. Do not expect a proper programme to increase energy capacity and to generate more power at home any time soon. The government has been dithering for 10 years without a proper energy policy, waiting for the lights to go out as power stations age and give up. This is the government which has given us more dependence on imported oil and gas and then wonders why it is all so dear.

Clearly the PM still has not learnt anything from recent by election defeats and from the sorry run of Opinion Polls. The more of our money he spends, and the more he borrows, the less popular he becomes. People on low incomes do not want one off winter hand outs to see the government through a political hole. They want an economy with job opportunities to lift them out of low income altogether. They want energy industries that are expanding capacities and putting prices up by less.They want enough money to pay all the bills.

George Osborne produced a very detailed and well researched speech this week demonstrating that people from low income areas and low income backgrounds are doing worse educationally and in terms of job opportunities now than when Labour first came to power. Far from narrowing the gap, they have allowed the gap to grow. The gap has not just grown because the rich have got richer – nothing wrong with that – but the gap has grown because the poor are struggling more and even less likely to get A levels, get a degree or get a decent job – everything wrong with that. It is the failure to lift and boost the poor that matters. A decade of throwing more money into regional aid and into benefits has failed. More fuel poverty, according to the government’s own adviser, is just a small part of the wider truth. There is more poverty. It’s a poverty of achievement and ambition as well as a shortage of money. That’s why we need a new approach to schools, to training and to incentives for work. That’s why we need to tackle tax poverty, for too many people at the bottom end of the income scale are trapped by Labour’s benefit and tax system.

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24 Comments

  1. Ian H
    Posted August 22, 2008 at 9:33 am | Permalink

    Such a shame the "Fuel Poverty" advisor did not announce the Brown administration is going to cancel the 5% VAT on Fuel,imposed by …er, the Brown Administration

    • Riddiford of England
      Posted August 23, 2008 at 6:26 pm | Permalink

      when oh when will we understand that our Provincial Government at westminster is forbidden by Brussels to alter VAT rates and much else.

      It is not a Competence of the English government.
      The Soviet EUnion receives the majority of its income by sequestering VAT so the tampering therewith is verboten.

      (Soviet in russian simply means Council so is apposite here)

  2. Louise
    Posted August 22, 2008 at 9:46 am | Permalink

    An excellent summary of the difficulties facing the electorate. My response to the exploding cost of fuel is to refuse to buy gas and open up the chimneys in our home. Alas many people live in modern houses without the luxury of chimneys. Proprtionately poorly made modern homes are more likely to be inhabited by poor people.
    New Labour in suggesting rescue packaging are effectively politicising the cost of fuel and deciding who is deserving of a lower fuel bill. This smacks of fixing the market as VAT is payable on fuel.
    If I went into Harrods and bought a pair of designer shoes I would not expect different prices to be levied depending on financial circumstances – yet this is the Government's response to tax poverty and high fuel bills. Take the money and redistribute it to those it feels are deserving cases. Rather Dickensian in my opinion.
    Louise

  3. Alfred T Mahan
    Posted August 22, 2008 at 9:53 am | Permalink

    Good wordsmithing – "Tax Poverty" has legs as a slogan!

  4. no one
    Posted August 22, 2008 at 10:12 am | Permalink

    The worst poverty of all of course is education and health poverty

    Where the folk who cannot afford to move house to be in the catchment area of one of the better schools are forced to use one of the sink schools, which have been appalling through labour and conservative eras in many of our public housing and inner city areas

    Selection for the best education by geography has replaced the 11 plus, and it's rather less fair

    In the same way if you are in a bad inner city or large council (or housing association now) estate you often are stuck with the bottom 10 % of GPs and you cannot move onto the better GP lists because the GPs operate catchment areas too, and health care is rationed by geography in the same way that education is

    And of course the genuinely hard working clever kids who at one time would have found a way out of the worst parts of the country are now stuck cos there is no mechanism to fund their time at a decent college or uni

    So the cycle of depravation and dependence will continue through the generations because the large wastelands of council housing with their entire population living on state handouts will continue to the next generations as none of the kids are getting the exceptional education they need to break out of the loop and escape

    And so we have so much wasted talent

    Throwing a bit of money around to help with fuel bills on the large wasteland council estates will be spent on extra beer and ciggies I know, don't the politicians understand life on these estates?

    Would you work in a poor school in one of our worst council housing estate wastelands? Not many good teachers do

    Throwing a bit of extra cash around to "deal with" fuel poverty is so badly not the solution to any problem

    Oh did I mention how crap the hospitals are is the old industrial areas? Sub 3rd world, why are we paying so much money for such bad service?

    And single folk who become ill or cannot find work often end up sofa surfing or on the streets, there is no safety net for the genuine hard working guy who finds he cannot work through illness, the safety net of secure tenure etc is only there for the established dwellers of the large public housing estates

  5. anon
    Posted August 22, 2008 at 10:14 am | Permalink

    Dear John

    When you have the time could you comment on the following, please?

    "
    Britain's terror laws have left me and my family shattered
    I am innocent yet was detained without charge in solitary confinement for days on end. It was a devastating experience
    "

    Reply: I cannot comment on the individual case as I am not fully acquainted with it, but have made general comments that the anti terrorism laws go too far and are being used in some cases for other purposes.

  6. Robert
    Posted August 22, 2008 at 10:18 am | Permalink

    Is there perhaps a link between poverty and the minimum wage? Why should emloyers be subsidised by the tax payer as wages are kept low and those inpoorly paid employment have to apply for means tested tax credits?

  7. no one
    Posted August 22, 2008 at 11:01 am | Permalink

    oh and i meant to say the large public housing wastelands where everyone is on state benefits and they suffer terrible schools and health care are NOT as it is generally thought a lost cause to the conservative vote

    most of the folk in these estates above ALL else want a decent education for their kids, and they can see its not happening

    if the conservatives genuinely addressed this one issue the labour party would take a massive hammering

    of course it needs more than words and politically correct nonsense, it needs radical multi dimensional action to massively ramp up the education available to the kids in these areas

  8. Louise
    Posted August 22, 2008 at 11:01 am | Permalink

    Surely New Labour have a vested interest in such devices as tax credits. They brainwash poor people into feeling that the Government helps them by allowing them to claw back some money rather then letting tax payers retain control over their own finances. This breeds irresponsibility and doesn't encourage ambition or independence.
    Re education Labour disliked the 11 plus because it offered an escape route from poverty and I suspect that they felt that people who progressed would not vote Labour.
    I spent a year at a Grammar school before the dreaded comprehensive system arrived and effectively my formal education finished then.
    These days many British people behave like sheep blindly obeying political correctness and ignoring common sense. Witness the stupidity of the Bins fiasco. How long before an epidemic breaks out due to uncollected rubbish and NICE refuses to fund treatment on the grounds that the rubbish shouldn't have been put out to begin with.

  9. Posted August 22, 2008 at 1:07 pm | Permalink

    At the bottom of this is the fact that us wide-eyed hopefuls who swept New Labour to power in 1997 are now feeling a bit fed up with having to buy cheaper wine, possibly even from a Supermarket, and not replace the Range Rover this year. This sort of situation hurts. Verbs might be right out this Winter as well. Which is not nice.

    Perhaps, a bit too satirical, because in actual fact, the fuel poverty/tax poverty situation is hitting average wage earners – the people who prop this country up, people with used Mondeos and back-garden hobbies and trainers to buy for their growing kids. They are now overtaking those who inexplicably vote Labour regardless of what whacky "policies" they implement.

    What I do not understand is how come we are taking this fiscal fisting and not taking to the streets to demand an immediate General Election?

  10. Posted August 22, 2008 at 1:09 pm | Permalink

    Fuel poverty would be virtually gone if we were getting nuclear electricity at half the present price as we could have had if the politicians had not prevented development of the nuclear industry. The Renewables requirement adds 12% to elcetricity prices.

    Nothing we can do to change that instantly but we could build new nukes in 4 years if the government regulators didn't first demand spending 5 doing the paperwork. If we don't do that (& by now perhaps even if we do) we are not only going to see prices keep climbing, we are going to see blackouts.

    It is dishonest of politicians to pretend that by passing a regulation or windfall tax they can cut costs. It is more dishonest to blame the producers.

  11. jeff todd
    Posted August 22, 2008 at 1:43 pm | Permalink

    I think the biggest loser through Fuel Poverty will be the Government (read Labour And Tory). Both administrations have slavishly jacked up fuel taxes on environmental grounds for decades.

    However the whole economy now relies on taxation from a product (oil), whose use the same taxes are supposed to curtail?!?! Bizarre.

    Where will Government (Lab & Tory) find the missing billions (once a viable alternative appears – eg hydrogen)?

    Are there any MPs honest enough to point out to the non-driving section of the population that the motorist funded subsidy (currently about 50 billion) will end quite dramtically? And at that point they will have to stick their hand further into their pocket and actually start to pay a fair share of running the country.

    Just because motorists have been soaked for years does mean they automatically accept "new" taxes to make up the inevitable treasury shortfall.

    Or are Government well aware, hence the real reason for, and the current fixation with, Road Pricing?

  12. Iain
    Posted August 22, 2008 at 2:58 pm | Permalink

    Robert, I agree, the Tax Credit system is just a way of companies getting the tax payer to subsidise salaries that are too low and don't offer a living wage.

    Unfortunately Cameron’s Conservatives seem intend on continuing this market distorting tax policy and continuing to feather bed sweat shop employers.

    If Tax Credits are required it suggests one thing, wages are too low. Unfortunately the mechanism for adjusting wages in the market place has also been corrupted, for when CBI bleats that they can't get the staff, ( what they really mean is that they can't get the staff for the wages they are offering) the normal market route is to up the wages to attract the labour they require. Regretfully the CBI's bleating has had the Government respond with flooding the market with cheap immigrant labour, which is going to impose a massive social cost, as well as making Tax Credits essential and a permanent feature of tax policy.

  13. Louise
    Posted August 22, 2008 at 3:31 pm | Permalink

    John
    I would be interested in your views on the appalling waste of tax payers money regarding Government advertising. As I dislike television I do not own a set. However I do listen to the radio and get bombarded every ten minutes with warnings about tv licensing dodging, car tax evasion , tax credits, benefit fraud, health and safety on the roads.
    The gist is "we are watching you always"
    In my opinion this is a complete piece of idiocy as criminals will ignore these injunctions and the tax payer foots the bill.
    Would David Cameron consider stopping this bombastic expense which I suspect is designed to encourage the "Big Brother State"
    It reminds me of Stalin's Soviet Empire with loud speakers shouting about five year targets.
    Louise

    Reply: I agree there is too much of it and its is intrusive. I want us to cut it as one of our many changes to cut out waste and unpleasant spending.

  14. Johnny Norfolk
    Posted August 22, 2008 at 4:42 pm | Permalink

    Spot on again john. Why cannot Labour see things as they are. Let people keep more of their money and create an enterprise economy. ah but then they wont vote Labour.

  15. Stuart Fairney
    Posted August 22, 2008 at 5:30 pm | Permalink

    Interesting that the government makes arbitrary definitions of poverty (60% of mean annual income), fuel poverty (10% of disposable income), and anyone favoured received handouts. (I cannot help but wonder if electoral poverty maybe defined as a non-elected prime minister languishing at 26% in the polls?)

    This helps neither those who get the state benefits (in fact it further traps them in dependency), nor those who pay for them out of heavy general taxation.

  16. APL
    Posted August 22, 2008 at 5:35 pm | Permalink

    Ian H: "Such a shame the “Fuel Poverty” advisor did not announce the Brown administration is going to cancel the 5% VAT on Fuel,imposed by …er, the Brown Administration"

    If fuel poverty is such a concern for this government, why not abolish fuel duty and abolish Vat on fuel.

    Since the tax on as an example, a litre of petrol accounts for about 80% of the retail price. This single act by the government would do more to address fuel poverty than any waffling by the fuel poverty adviser.

  17. mikestallard
    Posted August 22, 2008 at 6:30 pm | Permalink

    I truly hope that the difference between the Conservatives and the Labour is this:
    Conservatives (as you say) will tackle the real problems: impossible taxation, lousy Comprehensive education based on the 11+ SATs, hopeless bureaucracy etc, storage and supply of electricity, oil and gas and some new efficient coal. And so on.
    Labour: helping the poor community and the vulnerable community who are in poverty of fuel, power, education and health.

    Anyone who has any knowledge of human nature will assure you that the people are reewarded thrive and become the majority, whereas the ones who are not rewarded, but taken for granted will maybe just survive or, more likely, decline.
    This means that if you reward the vulnerable, the dispossessed, the criminals, the unworthy, the work shy, the incapacitated and so on, then – bingo! – you get lots and lots more of them.
    If, on the other hand, you reward the people who work hard to serve the people who need it (business word there!), then you get more of them. And these people, unless you interfere, will do well and prosper without government help for the most part too.
    If only the Labour could understand this very simple point.
    Giving out £150 to OAPs like me is, frankly, an insult. It wouldn't even cover one of their "business breakfasts".

  18. Bazman
    Posted August 22, 2008 at 11:27 pm | Permalink

    What about poverty caused by companies? A tax of overcharging? Elitists bleating about overheads, whilst living luxury lifestyles.
    Fat 1234.

  19. John
    Posted August 23, 2008 at 11:27 am | Permalink

    If the Tories get in at the next election, how long will it take for the general public to feel the change? I noticed that as utilities are putting up fuel prices Brown was handing out millions of pounds to Afghanistan. This is our money. How dare he give it to a hostile state. What are you proposing to do?

  20. APL
    Posted August 23, 2008 at 11:43 am | Permalink

    Bazman: "What about poverty caused by companies? A tax of overcharging? Elitists bleating about overheads, whilst living luxury lifestyles. Fat 1234."

    Do you really mean companies cause poverty? A company that creates something that people voluntarily buy. The company makes a profit which it distributes to its shareholders all the while paying its employees. So far as I can see, every party to the transaction is better off. The employees get paid, the shareholders get dividends, the customer who freely purchased his widget has a widget he wanted. No one is impoverished.

    Mark Wadsworth has crunched a few numbers on Centrica for example, a while ago they announced their profits to much gnashing of teeth and wailing by the socialists in the BBC. Mark says:
    http://markwadsworth.blogspot.com/search?updated-

    That Centrica it seems, makes £62.50 per customer per year profit. The rest is handed over to the government to waste. On things like the 'John Lewis List', not buying the best equipment for our soldiers, Making sure the MOD has the best marble in the MOD lavatories, another lash up on the Comet airframe the usual sort of big government graft.

    Anyway, £62.50 per customer per year seems a pretty good premium, to make sure I get gas whenever I turn the gas tap.

  21. Posted August 23, 2008 at 9:51 pm | Permalink

    Oh dear. Once again my comment seems to have disappeared into cyberspace.

    I can't figure it out.

  22. Robert
    Posted August 24, 2008 at 3:33 pm | Permalink

    I've lived all my life on a council estate and up until now have never ever had benefits, my wife has spina bifida and she has worked all her life, my neighbours have all worked the only time we did not was well through the Thatcher years, sad to say it looks like we are returning to a major recession.

    Then a few years ago while in work bang an accident lost my legs at work sued the company who of course went bust, then found the insurance was not up to scratch 13 years down the line I get 1/3 of the compensation I should have had, the gover

  23. Bazman
    Posted August 27, 2008 at 10:20 am | Permalink

    What other industries can put up prices by 30% and then another 50% and still make profit. These are not voluntary purchases. Remind me how the utility companies which are in reality little more than billing companies, can make a loss? How do the directors and shareholders loose money?
    The public are starting to see through this lie and also in the banking system and large companies being given money to waste on hare brained schemes.
    The lie being that all losses are socialised and all profits privatised.
    Companies making millions in profit and the rank and file employees paid so low they have to be subsidised by the state.
    Company and Middle class welfare no less.

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    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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