Energy price "concern"

A senior official from the energy regulator, Ofgem, has voiced concerns about government plans to make sure gas and electricity customers benefit from the lowest prices.

Andrew Wright, Ofgem's senior partner for markets, told MPs that "Not all consumers will be in positions where they will necessarily want to be moved onto the cheapest deal with their supplier."

The Prime Minister said on 17th October that he would legislate so that energy companies "have to give customers their lowest tariffs".

Suppliers were shocked by the remark, which implied that they could be forced to switch customers to their standard tariffs.

But later David Cameron clarified the policy saying that the coming Energy Bill would "ensure that customers get the lowest tariffs".

Today Mr Wright explained Ofgem's worries, saying: "It would be a concern if someone who was paying a modest premium for a green tariff, for example, was automatically switched onto the standard tariff."

He added: "Similarly the choice between fixed term and variable is one where a consumer may choose to pay a higher price in the short term in order to get the stability in the longer term."

He said he understood that the government was fully aware of the concerns and he expected any policy proposals which emerge would recognise that.

Andrew Wright to the Energy & Climate Change Committee:

"It would be a concern if someone who was paying a modest premium for a green tariff for example was automatically switched onto the standard tariff and similarly the choice between fixed term and variable is one where a consumer may choose to pay a higher price in the short term in order to get the stability in the longer term.

"Not all consumers will be in positions where they will necessarily want to be moved onto the cheapest deal with their supplier. My understanding is that the government is fully aware of that and I would expect any policy proposals which emerge would recognise that.

"One way in which that could be guarded against is providing customers with the opportunity of opting out of any automatic switch, that does give a safety valve."

Big jump in retirement incomes

Who's incomes have done better over the last quarter of a century: working people or those who have retired and are, mostly, depending on pensions?

According the Office for National Statistics, pensioners have done better by quite a wide margin,

Retired people's disposable household incomes are more than two and a half times larger, in real terms, than they were in 1977.

Average real incomes for the non-retired have risen as well. They've more than doubled - so a big increase, but not so substantial.

It is worth emphasising that these figures are adjusted for rising prices and wage inflation. In a growing economy, incomes have improved substantially in real terms.

But there are some other points to note from the ONS pension stats today:

*There's still a big drop in household income when you retire, the average drops from £35,008 to £17,674.

*There are still large numbers on low incomes: 45% of single pensioners have pension incomes below £10,000 a year.

*The more generous workplace pension schemes are being axed, so the outlook for retirement incomes isn't nearly so good.

That's what called the "pensions time bomb" - the result of the good schemes falling away and people saving less.

And it's why the government is forcing companies to enrol staff automatically in workplace schemes.

Big business for Nationwide

Nationwide Building Society reckons it can become a significant player in businesses banking and it could get a major boost if it manages to buy a large chunk of RBS, as I explain.

So how would the banking landscape look if  Nationwide did launch a successful bid?

Bank branches if Co-op completes purchase of 632 Lloyds branches and Nationwide snaps up 316 RBS and NatWests...

2,100     Lloyds Banking Group
1,758     RBS Group
1,614     Barclays
1,400     Santander
1,225     HSBC
1,100     Nationwide
1,000     Cooperative Bank

1.5m second homes

1.5m people in England and Wales have a second address. In the vast majority of cases, according to the Office for national Statistics, it is the result of students having an address at university or families splitting up.

The figures show that 165,000 have a holiday homes and 23,000 homes in Cornwall are second addresses.

£2.69 on state pension

A £2.69 a week increase in the state pension is on the cards from April next year, taking it to £110.14.

The extra money will be little more than half the increase handed out to pensioners this year.

The Chancellor has promised that the pension would rise by the highest of CPI inflation, average earnings and 2.5% - the so-called triple lock.

The September inflation rate, reported tomorrow, is the figure used for pension and benefit uprating. It's expected to be 2.2% or lower, while average earnings have been rising at just 1.5%. So the 2.5% guarantee is likely to be called upon - resulting in the extra £2.69.

The Chancellor tends to confirm increases in pensions and benefits around the time of the Autumn Statement, which he'll deliver in early December.

By that time pensioners and others will be having to cope with the latest round of price increases from gas and electricity suppliers.

CPI inflation could well start rising again, so the £2.69 increase from the current £107.45 a week could look like a big disappointment.

Especially if you compare it to this year's £5.30 or 5.2% jump.

Real incomes rebounding

Average household income rose by £69 in real terms from April to June in real terms, that's stripping out the effects of inflation.

It's reached the highest level for a year and a half.

Average second quarter real income after was £4,510 after tax, up 1.6% from the previous quarter and 2.8% higher including inflation.

The ravages of high inflation, driven by rising oil and food prices, and higher VAT, have put a huge strain on family budgets - while incomes seemed adequate in cash terms, they bought less and less.

Real incomes dipped to their lowest level for more than 5 years at the end of 2011, but they have been rising slowly since then as inflation has fallen back.

The figures from the Office for National Statistics include wages, pensions, investment income and benefits, along with an additional element which estimates the value to families of education and healthcare.

Why our energy bills are stupid

British Gas's 6% price rise has highlighted an absurdity about the way in which we are charged, and pay for, gas and electricity.

The point is that prices will continue to go up over time, almost inevitably. Hence, we need to reduce consumption, both to hold down our bills and to reduce carbon emissions.

Yet the pricing structure we are faced with actually encourages consumers and businesses to use more.

Most tariffs have a daily standing charge or they start high and then go down once you have burned up a certain amount.

Low users tend to pay the most per unit.

Why not turn the system on its head: start low, then impose higher tariffs if you use more, rising to penal rates?

That wouldn't be in the suppliers' interests, because they're in the weird business of trying to sell more energy, while having to fly the flag for energy conservation.

But it would cut usage of gas and electricity - and protect people and businesses who did their best to remain within reasonable consumption limits.

There's a hint today from British Gas on can be achieved.

It says that despite hefty price increases in recent years, customers bills have only gone up in line with inflation, because they are using less.

One reason is that people simply can't afford to turn on the heating.

Wouldn't it be better if they paid less for what they really needed, but a higher charge for wasting energy?