21/08/08 - Conservatives To Help Cut Energy Bills Of Swindon's Poor Households'

Conservatives are to tackle unfairness by cutting poor households’ energy bills by up to £100 a year

As part of the Conservative Party’s campaign on fairness, George Osborne and Alan Duncan today announced that a Conservative government will reform Post Office Card Accounts to enable families without bank accounts to benefit from the lower energy and water tariffs offered to customers paying by direct debit.

It is estimated that this could cut the energy bills of up to 4 million Post Office Card Account (POCA) holders by up to £100 a year.

There are approximately 8 million people in the UK who do not have a bank account or are effectively unbanked because they withdraw all their cash weekly. Many of these use POCA instead. But because they cannot pay their bills by direct debit, they typically pay much higher rates for gas, electricity and water.

A Conservative government will reform POCA so that they can be used for the first time to pay utility bills using the equivalent of a direct debit. This proposal, which has support from leading utility companies, will generate significant savings for energy companies through lower collection costs, which can be passed onto consumers in the form of lower bills.

In addition, because state benefits are automatically paid into POCA each week, users also benefit from a more convenient and time efficient way of managing their finances and paying their bills.

The Labour Government has rejected this policy because adding functionality to POCA contradicts their plans to shut Post Offices. In fact, this policy could also generate up to £20 million a year in additional revenue for Post Offices, which could help keep some Post Offices from going to the wall as a result of Labour cuts.

Commenting, Shadow Chancellor George Osborne said:

"It is deeply unfair that many of the poorest households end up paying more for their energy and water bills because they don’t have bank accounts and can’t pay by direct debit.

"Our plan, developed with industry, will help people struggling with rising household bills by letting them use their Post Office Card Account to pay their utility bills.

"This fair Conservative plan could cut the energy and gas bills of up to four million people by £100, helping many families at a time when the cost of living is rising fast."

Cllr Justin Tomlinson, Swindon North Prospective MP said:

"The Conservatives have been working with industry to develop this sensible and fair policy.

"This is a significant weapon for attacking the growing pain of fuel poverty. Price rises have hit the poorest hardest. This is a scheme that would target the most vulnerable in a focused and practical way."

"This would be a much needed and welcome move for many Swindon residents."

Third party comments:

Theresa Perchard - Director of Policy, Citizens Advice Bureau "At a time when fuel and other household costs are escalating, intensifying the pressures on poorer consumers, this proposal offers to put more money in the pockets of poorer consumers by reducing their outgoings and providing for weekly budgeting to help avoid debt. And the fact that it might cost less if utilities, other creditors and government bodies work together rather than alone must mean it deserves serious consideration."

Phillip Mills - Director of Water Services, Water UK "Debt and affordability are serious issues for the water industry. The CEOs from our 26 member companies therefore support the this proposal and we aim to be an active partner in developing this initiative."

Jo Steven - Director, Specialist Marketing, EDF Energy "EDF Energy are keen to assist vulnerable and fuel poor customers in managing their debt and energy usage. This has the potential to provide customers with an effective budgeting mechanism which could provide a secure channel for social tariffs."