Ross Clark Ross Clark

Martin Lewis is wrong about the ‘energy poll tax’

'Money-saving expert' Martin Lewis (Credit: Alamy)

Given that a fair proportion of the UK public seem to want Martin Lewis to be prime minister, the government might well hesitate to dismiss the Money Saving Expert’s latest grumble: that Ofgem’s cap on standing charges is to be jacked up from today – from 53 pence to 60 pence per day in the case of electricity and from 29 pence to 31 pence in the case of gas. This rise comes in spite of the sharp fall in Ofgem’s energy price cap, which should see average annual dual fuel bills fall from £1928 to £1690. Lewis is not the least bit pleased, tweeting that standing charges are ‘an unfair energy poll tax and a moral hazard that disincentivises people from cutting bills’.

Ofgem’s cap on standing charges is to be jacked up from today

But is that really true? The most obvious objection to Lewis’ comments is that standing charges are not a tax but part of how we pay for a service which many of us find rather useful: to have an energy supply to our homes.

Why have a standing charge rather than simply charge for the energy used? Because it costs money to maintain the wires and pipes leading to our homes whether we are consuming any energy or not. As for the idea that including a standing charge disincentivises us from cutting our energy consumption, that hardly holds water. For most people, charges for the energy they consumer remain by far the most substantial part of their bill. You can still save money by turning off lights or turning down the heating, even if not quite as much as you would save were your electricity and gas bills to be based on energy consumption alone.

What standing charges do is to ensure that very light users of energy are still contributing to the cost of maintaining gas and electricity connections. Light users will include owners of rarely-used second homes and speculators who are sitting on empty properties in the hope that their value will go up. Would Lewis really be happy if such people made virtually no contribution to the maintenance of local energy infrastructure, leaving the burden to be borne by others?

There are plenty of ways in which energy companies are exploiting their customers, such as by switching customers onto higher-priced pre-payment tariffs without even their knowledge, or by being slow to refund people who have built up surpluses through direct debits, or failing properly to address the issue of inaccurate billing through malfunctioning smart meters. Some customers have reported receiving eyewatering bills in this way. But sorry, the use of standing charges for electricity and gas bills is not one of those forms of exploitation. On the contrary, a bill which combines a standing charge with a per-unit cost of energy is the fairest way of charging for energy.

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