DOMESTIC RING-FENCING?

I heard an interesting discussion on the radio yesterday (BBC Radio 4 but I can’t recall which programme). The topic was the massive increases in retail prices for domestic energy, Scottish Power proudly leading the way with a planned 19% hike in domestic gas prices. (Have you ever heard of a 19% drop from any energy provider when wholesale gas prices are falling? Answers on a postcard, please.)

This news has led to predictions of widespread hardship next winter for those older people for whom energy costs are a major proportion of their budget; thus the discussion turned to the annual Winter Fuel Payment, which here in the UK will be £200 for winter 2011/12 (unless you are over 80, when it’ll be £300).

To put that allowance in perspective, the predicted energy price hike is expected to add around £175 to average annual bills for Scottish Power’s 2.4m customers; and up to £300 extra as a UK average, according to an industry commentator, when other energy companies follow suit.

Benefit used for its intended purpose? Discuss.

A contributor to the programme said “studies have shown” that in general the Winter Fuel Payment is in fact used to buy energy; 40% of recipients use it for the purpose intended. As this is the predominant use of the benefit, the measure is seen as appropriately targeted.

This made me wonder: “how do they know?” These days the payments will predominantly, if not totally, be by cheque or bank payment. So the money goes in to a bank account. It comes out to pay for … what? The concept of ring-fencing in domestic economy only means something for the minority of people who do regular and accurate budgets and cash-flow forecasts.

The alternative: they asked people through an opinion poll. Fine … but if you were in receipt of this fuel benefit and wanted to hold on to it; and then a pollster came to your door or your telephone and asked for what purpose you’d spent the money … would you admit it was for drink or drugs or gambling or going to football or a few dinners out?

Have I missed something? If not, I rest my case, m’lud.

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