Today's news that charities Help the Aged and Friends of the Earth are seeking a judicial review application in order to challenge the Government over its fuel poverty strategy didn't seem to set the media alight, but this is a slow-burning issue (excuse the pun) which could seriously threaten Labour's electoral chances at the next election.
Despite official consumer price inflation figures suggesting increases in the general level of prices remain relatively modest - 2.3% in 2007 - fuel prices have been rising at a much faster rate in recent years. For example, electricity price inflation was 8.0% in 2007, down from 21.7% in 2006, and gas price inflation was 7.6% in 2007, down from 31.3% in 2006. In summary, domestic fuel prices rose at over three times the rate of general prices last year, and almost fifteen times as fast the year before.*
Those who lose out from high price inflation on 'necessary' goods (goods that are demand-inelastic) are predominantly those on fixed incomes, such as pensioners and the unemployed.
Rightly, the Government had perviously committed to eradicating fuel poverty by 2010 - this was a legally binding commitment. Yet in their latest annual report on progress towards these targets, the Fuel Poverty Advisory Group (alarmingly) note that:
"The Government appears to have given up on the legally binding 2010 Fuel Poverty Target."In 2007, 2.9m households and 2.3m vulnerable households remained in fuel poverty.
Help the Aged and Friends of the Earth are right that the Government should not give up on its promise to eradicate fuel poverty merely because energy prices continue to rise (if anything, that should be even more reason to meet its target).
However, the Government can ill-afford the additional expenditure necessary to fulfil its legal obligation on fuel poverty. Finances are already tight, and additional taxation in the current uncertain global economic climate is likely to compound the downside risks to the economy.
That will be scant consolation to the hundreds of thousands of pensioners who cannot afford to heat their homes.
If the 2010 target isn't met, and if the Government do little to alleviate current energy inflation, then pensioners (amongst others) will be rightly aggrieved. And what's more, they are the most likely to vent their anger at the ballot box.
The Government ignores its pledge on fuel poverty at its own peril...
*Source: ONS
One response to “Is this the issue that will cost Labour the next election?”
>'necessary' goods (goods that are
> demand-inelastic)
You mean "goods for which demand is (price-)inelastic". And that's not a good definition of necessary goods. A better one would be: "goods that are demanded in a fixed quantity, and thus for which - up to that quantity - demand is inelastic with respect to price."
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