I have been asked about ways of reducing energy/power bills. Someone gave me a device that claims that it can reduce electrity bills by  a high percentage. I am a bit cynical about it, it seems too easy a solution and I have learnt over the years that most of the time there is no simple solution to most problems.

I welcome comments from anyone who is already using this device. It is a plug in module from Intelliworks, model SD-001

What it says that it does is to save electricity by ‘optimising the voltage and current demands thus reducing active power demands’.

Since it was free to me then I cannot lose any money by using it, unless it actually uses up power!!! 

I have had it plugged in for about four months now and have yet to get round to checking the last bill to see if it has made much difference. One quarter is not too meaningful a test! I am not too bothered to check it until at least after Christmas.

I also have some energy saving tips on the website

http://www.takefinancialcontrol.com/household/tips_on_reducing_utility_bills.asp

They are fairly obvious but there will be a lot more being added shortly.

This is one subject that probably affects everybody in one way or another. And the colder the weather is, especially during the winter season, the greater the impact is on their lives.

People are now caught between two opposing forces. The first is the government and the second are the power companies. The interests of each party are completely different.

The energy companies are in business to make money. Not just for themselves but for their shareholders. Research  commissioned by the Local Government Association found that they paid £1.64bn in dividends in 2007, an increase of £257m more than the year before. 

Energy prices have significantly increased this year with the promise of more prices to come in the next few month. In July EDF raised gas prices by an average of 22% and electricity prices by 17% for domestic customers. British Gas then raised gas prices by a record 35% and electricity prices by 9%. Scottish Power raised gas prices by an average of 34% and electricity prices by 9%. Npower increased their prices for domestic customers by an average of 14% for electricity and 26% for gas. Prices for  Eon have increased with gas prices up 26% and electricity prices up by 16%.

There are regional differences as well, with prices in the south being higher than in the rest of the country.

There are plenty of people in the UK who can afford to pay these increased energy bills. But there is a huge number of people who simply do not have the money to pay these bills. It is not as though the energy bills are the only price increases that we are seeing! Almost everything is going up in price.

Yes the government have announced measures to help people with their power bills. There have been a number of different annoucements this year but it really is not clear which announcements have now been abandoned and which are still current. Also, some of these announced plans are for future years!

The real question is ‘how are people with lower incomes going to be able to afford to pay their fuel bills over this winter?’

There have been so many price rises in basic commodities in the last few years. Whatever the reasons and however justified these increased costs are, they are putting many, many people  in a position where they will not be able to afford to pay their energy bills over the winter. Is the government taking steps to keep the energy prices down so that people can survive financially over the next six months?

Or has the UK under New Labour become the most taxed country in the world with all the money already spent and the government powerless to help people with their enegry costs this year? It certainly feels like that!

There is a story in the press regarding a World War 2 veteran and his problems with his electricity supplier.

It highlights a real problem in our society today with how we treat vulnerable people.

If someone has a problem paying their electricity bills the power supply companies install a  pre-payment meter, sometimes without the permission of the customer!

On face value this may seem to be the answer, and it may well be so for some people, but take a moment to consider the ramifications of doing this.

The first point is that the customer will not be able to go into debt to the power supplier. OK I hear you say! But what happens if the customers, mostly  people on low incomes who are often vulnerable people through age or illness, have no money to put in the meter?

They will have no electricity. They will have no lights, they may not be able to cook food or have a hot drink, they will not be able to listen to a radio or watch television (if they have one). It could be days before a visitor turns up and discovers what has happened.

A hell of a way to treat a vulnerable person in a so-called civilized society

What is clear is that pre-payment meters exist solely for the benefit of the power supply companies. It means that they won’t have to sort out debt problems from customers who simply cannot go into debt if they have had a pre-payment meter installed.

Unfortunately the customers are often elderly, sick or vulnarable people who often cannot cope with what is going on around them.

Another aspect of having pre-payment meters installed,  and one that I find really appalling, is that the unit cost of electricity is higher than the unit cost normally paid by consumers!

So we have elderly, sick or vulnarable people, who are mostly on fixed incomes, forced to pay more per unit  out of their limited incomes on their electricity, and we still cut them off the moment they run out of money!

It is time that prepayment meters were banned where elderly, sick or vulnerable people are involved. Their lives are at risk if they have no power, especially in winter. But the quality of their lives is made so much worse if they are unable to use electricity for basic things like cooking, reading and keeping warm.

Society seems to care so much for people’s rights. There is such a fuss about ‘equality’, we mustn’t hurt people’s feelings, etc. etc.

But we don’t mind treating our elderly, sick or vulnerable people in a worse way than we would ever be allowed to treat an animal!

More and more reports are coming out on the effects of the planned increases in Vehicle Excise Duty.
The idea of these tax increases were to influence buyers of new cars to make choices to choose smaller, more fuel efficient and more environmental friendly cars. The plans were announced and were accepted as reasonable by most people.
A short time later, it was quietly states that the tax would apply to all vehicles purchased as new from 2001. So all cars purchased in the last seven years are also to be taxed.
It would be kindest to say that the government did not understand the consequences of their legislation.

In the last few months used cars have lost 25% of their value, family cars have lost even more.
The worst thing about these tax plans are that they effect people who buy second-hand cars significantly more than those who buy new cars.

The tax on (say) a £2000 used car is the same as a brand new car worth (say) £10000 car if they fall in the same emissions bracket.
Worse still, as new cars become more environment friendly their owners will pay less tax than people with older models of the same car!
This is a tax that affects people who buy used cars more than those who buy new cars, and the less that one can afford for a car, the higher is the proportion of tax that they have to pay.
An own goal? Looks like it.

The Bank of England governor has said that the UK faces its “most difficult economic challenge for two decades”.

Mr King also warned that real take-home pay would stagnate, making life difficult for some families.  We shall have to see what his definition of some is! I know that the last thing a person in his position should say is that many or most people will have difficulties. But the some has to include everyone on low wages, whether it is those on benefits, smaller pensions or simply those on the minimum wage. That is a lot of people.

The reason why so many people are going to be seriously affected is that the price increases are on the basics, such as food and power bills. People have to pay these bills, they have very little room to manouver. They will also have to pay mortgages, loans or credit card bills that they may have.

There will be very little money being spent on other things, which in itself will cause problems with the economy!

We now have a much better idea of what we are facing over the next 12 months.

The Consumer Prices Index (CPI) rose by 3.3% in May, up from 3% in April,  the fastest rate since the CPI measure began in 1997, although, to be honest, that was not that long ago! It is thought that the index will exceed 4% in the next 12 months.

On the face of it these figures would not seem to be that bad, but I think that they are bad news to the huge number of people in the UK who do not have highly paid jobs and plenty of disposable income! 

The idea of a price index is that it measures changes in prices of a ‘basket’ of goods and services that people, on average, spend their money on.

So when we look at the items with the biggest impact to ordinary people we find that that they are food and non-alcoholic drinks! Meat products and vegetables in particular are increasing in price.

The price of oil is nearly double that of 12 months ago. Most people have been affected the price of petrol and diesel at the pumps. What they probably also realise is that they are paying for the extra fuel costs of the haulage companies and the increased energy costs of food production in the factories and on the farms.

Gas prices are more than double what they were 12 months ago. Household energy bills are going up and will continue to be high whilst the wholesale price of fuel is high.

What I can see behind this headline inflation figure is a big impact on the lower paid and those with little disposable income. Of course there is good news. Apparantly DVDs are now cheaper which is a relief!

The increases are on the items and services that people need to buy all the time. But there are very many people in the UK who simply do not have the money to pay the extra. They are going to have to find the money for gas and electric bills or they will be cut off. They will have to find the money to pay for their basic food requirements and necessities. They will have to pay their loans and credit card bills

But they will cut back on other items, which in turn will impact the shops and other services that are not essentials.

I do urge people to start  cutting back their expenditure now! Avoid borrowing money to buy higher value items even if they seem to be a bargain!  Don’t borrow more money or increase your credit card debt. Do everything that you can to avoid spending money and try to have a credit balance in your bank account. There are difficult times ahead. Start doing what you can now to help yourself over the next 12 months.

I have to take this view because it is the right thing for families to do! It won’t help the shops and other non-essential businesses unfortunately!

Some MPs are beginning to speak out about the potential impact of a planned change in vehicle excise duty (road tax) which will see drivers paying more for more polluting cars registered since the end of 2001.

The MPS now say that ‘poorer motorists will suffer most from plans to increase road taxes on more polluting cars’.

What they mean is that the motorists who buy older, used cars will pay a disproportionally higher amount of tax based on the ‘amount of pollution’ the car produces. So this tax to be paid each year is the same whether it is a brand new car or an older model of the same car.

An example is that cars in Band M will pay an annual tax of £440. This is the same amount of tax regardless of whether the car costs £2000 second hand or thousands more direct from the showroom!

It is easy to see that those who buy second-hand, older cars are those, in the main, cannot afford brand new car prices and they will ’suffer more’ according to the MPs.

One other ‘unfair’ consideration is that the car manufacturers will be producing vehicle models that are more and more ‘environment friendly’. The way that this new tax is being applied will mean that those who will be able to afford these newer models will end up paying less tax than those people who can only afford older cars!

It seems to have been a long time since legal action was started regarding the excessive penalties being charged by the banks for accounts that go overdrawn or have payments bounced due to lack of funds. It is a mistake to think of this case as only refering to overdrafts.

The main reason for this delay is that a separate legal case arose over whether or not the Office of Fair Trading had the legal power to decide on what level of charges were considered to be fair.

The judge would clearly prefer the Office of Fair Trading to be empowered to deal the issue of bank charges on an ongoing basis. His ruling effectively ‘hijacked’ the original court case and was a victory for the Office of Fair Trading, which is now seeking legal confirmation that it can rule if bank charges are fair or not. But it did mean that a separate legal case was now required, the original case was now ‘on hold’ until this new judgment was completed. 

This new court case should start before the end of the year, but further delays could occur if either party take an appeal to the Law Lords.

The banks earn an estimated £3.5bn a year of income from charging customers who have bounce checques, direct debits etc. or go overdrawn without permission. It is not the principle of charging people for going overdrawn or for bouncing outgoing payments that is being challenged, it is the amount of the charges.

The banks, with their billions of pounds profits and their highly paid executives, justify charging people for bouncing cheques, direct debits and standing orders. These charges are typically £30 for each ‘bounce’. The banks are happy to resubmit a failed direct debit a few days later even if no money had gone into the account in the mean time. Of course it would be bounced again with another charge applied!

Note that no overdrafts are involved in bounced transactions. It is just a computer program doing what it is programmed to do!

An unauthorised overdraft will only occur if a cheque covered by a guarantee card is used.  It is indeed reasonable to charge people for such an overdraft. However I would seriously question that charges of £30 upwards are reasonable.  Why not charge people a similar amount as would be charged for an arranged temporary overdraft. Of course charges for having an overdaft, authorised or not, will accrue over time.

The majority of people on lower incomes have some sort of ‘basic’ bank account. These accounts do not have a cheque guarantee card. It is impossible for these accounts to go overdrawn, unless the bank allows it to happen. To many people with basic bank accounts these charges are simply wicked, a penalty that is out of all proportion to the offence!

A really difficult situation arises where a simple mistake, not everybody is able to manage money effectively, can cause a number of direct debits to be failed incurring a charge on each transaction and then the system tries again and applies another set of charges before, typically, cancelling all the direct debit mandates.

Suddenly a person can owe hundreds of pounds to the bank. Then any money being paid into the bank account disappears into the overdraft and they are simply unable to pay their bills or their mortgage or their rent, or even buy food for the family. It is a devastating situation for many people who simply cannot cope with what is happening to them!

People are encouraged by the government to get their benefits, pensions etc paid into a bank account, it is cheaper for all tax payers! But a £30 penalty when your income for the week is possibly under £100, is the equivalent of charging a person on an average wage of (say) £25K a penalty of £150.

The fixed charge for incurring an unauthorised overdraft or to have a payment bounced, is totally out of proportion for those people on lower wages, benefits or pensions. 

As of this moment, the price of US light, sweet crude (oil to you and me!) is $135 per barrel. Last May it was $65 per barrel.

Higher oil prices cause the garages to increase the price of fuel on the forecourt. Tax and VAT are a very large part of each litre of petrol that we purchase. According to http://www.petrolprices.com, in 2007 the price of one litre of unleaded petrol was 95.1 pence, of which 63.7 pence was tax!

It is clear that as the price of petrol increases due to the increasing cost of oil, the additional tax taken by the government makes a big difference to the price we are paying at the pumps.

 Even if you do not drive or are ever even a passenger in a car, the increasing cost of petrol and diesel fuel is going to hit you in the pocket.

The cost of air travel will go up. This will increase the cost of many foods and other products that are transported from the rest of the world to the UK. Everything that needs to be transported and delivered will be subject to price increases because of the higher petrol and diesel prices.

Food prices are also affected. The higher fuel prices increase the cost of the production of the food.  All the deliveries to the farms and factories start to cost more.  The machinery used by the farmers cost more to run. The production lines in the factories cost more to run. 

And then you need to allow for the fuel costs to transport the food to the shops and supermarkets. Most of these cost increases are passed on to the consumer!

It looks like almost everyone in the UK will have to pay more if the current high prices for petrol and diesel are in effect for very long,

We keep hearing about the ‘credit crunch’ and problems with the housing market. One thing that confuses the situation is that some people are ‘talking the market up’, and others are a bit more focused on the consquences of a housing market slowdown.

What I cannot tell you is if the housing market is going to fully recover in a couple of weeks, stay roughly as it is for months or completely collapse! 

The latter is unlikely. A worse case scenario for most people is that they simply stay where they are, paying their mortgage, and ride out the storm. The former is unlikely too, there is too much going on around the world to imagine that the UK will suddenly be completely all right, and that we can just carry on with booming house prices, etc!

Hopefully the UK will just go through months, maybe a year of many people experiencing the sort of problems that we see being reported in the news every day.

Please remember that when you see phrases like ‘people suffering from the credit crunch’ and ‘mortgage repossession’, it frequently means that families, parents and children, are going through a very rough time. If you know people who are in this situation then do make an effort to help them out. You never know, you might appreciate that sort of help yourself one day.

We will also probably see a slowdown in certain business services and quite a few retail shops. We all need to buy food. We are going to have to find the money for fuel bills. But who is going to take the family on a holiday abroad if they are struggling to pay the mortgage or the rent?
New washing machine? Time to replace the telly with one of those home cinema setups? A new paint job throughout the house?  We get the service or the product but other people down the chain get paid for doing their part.

Unfortunately I suspect that most people would put off these sorts of purchases unless they really had to go ahead with them. So we will see an increase in bankruptcies and insovencies, personal and business. We will see businesses and shops getting leaner (which means that they will get rid of staff!). And the cycle repeats itself!

The ‘credit crunch’ will only really become a problem, at least to the majority of people in the UK, if it steadily get worse and worse, affecting more and more people as time goes on. This is the scenario that I hope we will not see!