Energy bills could go up by 40%

[Ferral]

Even better. Don't get me started on local councils!

We were 2 days late with this months council tax payment, 48 hours is nothing in the grand scheme of things. In those 48 hours they managed to send us a letter out telling us they were taking us to court over non payment. We paid the council tax and setup a direct debit. Things are now sorted in our eyes.

They still took us to court as the paperwork was sitting in an office somewhere not even looked at and now we have to foot the extra court costs due to them not doing their job right. We contacted them about this and they just wern't bothered at all.

Going to have to contact the court on this one now to see if we can get it sorted. My guess though is that what is done is done tough.

[Vimeous]

I would have thought drastic leaps in energy prices is just the beginning of a steep spiral.

Supplier hikes price to cover rising costs.
Consumers notice because the hike is drastic and takes steps to reduce their outgoings.
Demand reduces (or rather grows more slowly)
Supplier hikes prices again to cover shortfall

I'd of thought it wouldn't level out until the suppliers make the increases less dramatic.

Whatever happens there's little, if any chance we'll see prices fall as dramatically as they rise, even if supply is restored to previous levels.
The sooner non-geographic, high-density power/fuel alternatives are more prevelant the better.

[TooNice]

Originally Posted by Funkstar

And as for inflation: it doesn't make prices go up, inflation figures are a way of showing the average increase in a cross section of prices. This is measured using the Consumer Price Index in the UK.

Just to add a little, some measurement of inflation (notably the CPI used in the US) ignores food and energy. Yea, in the days of rising food/gas price, it just leaves them out completely. So you end up this less alarming, yet rather skewed value.

[Saracen]

Originally Posted by Stringent

If inflation is due to go up by 4% HOW can all the energy go up by 40%? Someone explain?

/me is economically challenged.

There's no such thing as a simple, true and accurate measure of inflation. It depends what you measure, and how you measure it.

What the government does is to select a "basket" of goods and services, and monitor prices on those products over a period, so you can see how they change. But the results you get will depend on the goods and services you choose to measure, and of course, those you don't, and how you choose to allocate a weighting within that.

For instance, if you include 100 common foodstuffs, gas and electricity, and flat-screen TVs, you can sample prices of those products over the country, and derive an "average" that, theoretically at least, represents "inflation".

Now, suppose in that mix of products, you average food bill has gone up by 10% (over 12 months), but the price of a flat-screen TV has halved from £2000 to £1000. You might find that a typical person paying £200 a month for food is not paying £220, which is £20 a month more, which is £240 over the year.

But that TV is now £1000 less. So you're actually £760 a year better off ...... if you buy a flat-screen TV that year. Of course, if you're skint and not in the market for a £1000 TV, and wouldn't have been buying one at either the old or new price, then it's inclusion in the index at all means that while the figure might have some notional value across the country, it does not reflect costs for all individuals.

This example illustrates three things :-

• why gas and electricity going up by 40% is still consistent with an overall 4% 'inflation' rate .... it depends what you measure. Some things, over the last year or two, have shot up (food, petrol, gas, electricity, many mortgage rates), but others (lots of tech items) have come down. Any inflation index nets them off against each other, but has to "weight" how much influence each item has, according to (among other things) frequency of purchase.
  
  
• why the way in which raw data is manipulated is critical ...... you need to put a 'weighting' on items in the basket to reflect their usage. After all, different people buy different mixes of products and that very much depends on things like income levels. Caviar and Champagne might have gone up a phenomenal amount, but it probably wouldn't bite real hard on those on housing benefit.
  
  
• why the products you select is critical. In my list of products included in the Saracen 1 Price Index (SPI-1), I didn't include petrol, and I didn't include any form of hosuing costs, be it mortgage rates, or rent. Ooops.

The rate the government use, the CPI, is an even more arbitrary rate than the one they used to use (RPI), and excludes some things that RPI includes, such as mortgage interest. If you use RPI, then the current 3.3% figure looks more like 4.5% ..... and even that doesn't represent what has happened to the basic, fundamental costs that most households face. Some things you can cut back on (petrol, often, by eliminating optional journeys .... or driving more carefully). Others, like domestic fuel and basic foodstuffs, are FAR harder to cut back on. So .... when any government measure of inflation includes a mix of product type (like foodstuffs and flat-screen TVs) it's blindingly clear that a single measure is really jsut a statistical tool and bears, for most people, little resemblance to the changes in their actual costs and expenditure.

Originally Posted by TooNice

Just to add a little, some measurement of inflation (notably the CPI used in the US) ignores food and energy. Yea, in the days of rising food/gas price, it just leaves them out completely. So you end up this less alarming, yet rather skewed value.

Yes, quite.

If a politician wants to make inflation look good, all they have to do is exclude certain things from measurement. It also makes rather a farce of international comparisons unless everybody collects basically the same data, in the same way, and applies the same weights and manipulations. And they don't.

As I've said before on here, rather often, statistics can be made to sit up and beg, and with a careful presentation, they can be made to sing for their supper while performing back somersaults, too.

[neonplanet40]

Well guys we got a letter here yesterday from our electric company and our prices are rising 20% as from the 1st of July !!!!!!

Not good at all. Then you have that prick telling people not to ask for pay rises! How idiotic is that? Surely if people haven't enough money as it is and all these prices are going up then a pay rise is exactly what they need?! My job where i work part time at weekends to get money for university is offering us a pay rise of 2.7%. Crap to be honest.

I don't see him taking a pay cut for the country. This place infuriates me as of late. The country is going to the ****s and they are doing dam all of worth to help.

[Koolpc]

MP's would go up in arms if their allowances were stopped!!

The average guy in the street (Me!!) is being crippled by high taxes and extortionately high bills for fuel etc etc.

The government are greedy with the taxes etc. So are all the companies who hike up the cost of electric, gas etc. Not to mention the council tax bill that us poor people who have to pay it don't see any value in it.

Higher wages are needed to pay for the ever increasing bills. It is a vicious circle. Maybe we should all go back to being cave men!!

[iranu]

The two biggest problems were; El Gordo stealing so much of your money to waste in the public sector that people no longer have the spare capacity to save for the bad times. Secondly the whole plan of New Labour was to keep inflation artificially low so as to finance cheap mortgages for all (change to CPI). This plan worked and gave everyone a feel good factor which allowed them to think New Labour were competent with regards the economy. New Labour only planned to be in power for two terms, the third was a dream come true, but by that time it was too late. Mr Broon was consumed by thoughts of his own brilliance and like any socialist cannot change his desire to spend everyone else's money. Tax Cuts (which are what is needed, they boost the economy and will give respite) cannot happen under Labour anymore than a shark cannot stop swimming, it's against the nature of the beast. Even if tax cuts were on the table fiscal drag would mean that the short term is still going to be as very painful for alot of people. Paradoxically the very people New Labour are supposed to stand up for, i.e. those on low incomes.

People were too stupid to realise because the attitude of "hey! I'm <Oi - watch your language - Saracen> rich, rich, filty rich I tell ya! My house has gone up £50,000 in one week. It's great. Now I can spend all that loot on flat screen tellies! Woohoo"

They believed the hype and so did the banks, lending so much cash that we now have a debt culture. See PCgeeks post #8 for confirmation. People have been living past their means for at least 5 years, boozing on cheap credit. Now they gotta pay it back and their easy money has dried up, it's making them hurt with regard to increasing fuel and food prices. The hangover is starting to bite and people are realising how foolish they have been a) to vote Labour in with such huge majorities b) borrowing money thinking that house prices would go up forever.

You can't begrudge China, India and the rest of the developing world wanting to have living standards the same as ours and that means more demand for fuel. There is only so much capacity and getting greater capacity requires large investment and more importantly time. Higher fuel prices means higher prices for everything. The only bright side I can see to all this is that people will hopefully not vote Labour in for another generation. It's going to take that long to fix the mess.

Tighten your seat belts it's going to be one hell of a bumpy ride.

[iranu]

Originally Posted by neonplanet40

Well guys we got a letter here yesterday from our electric company and our prices are rising 20% as from the 1st of July !!!!!!

Not good at all. Then you have that prick telling people not to ask for pay rises! How idiotic is that? Surely if people haven't enough money as it is and all these prices are going up then a pay rise is exactly what they need?!

That leads to even higher inflation. The last thing we want is going back to the 70's and spiralling, rampant inflation bought on by rising wages and therefore subsequent price rises. If you think 4% (official) is bad go and look up the inflation rates of the 70's - 25% anyone?

You are looking down the wrong end of the telescope. It's not people's wages that need to rise, it's the tax they pay has to be reduced.

[G4Z]

Originally Posted by iranu

Mr Broon was consumed by thoughts of his own brilliance and like any socialist cannot change his desire to spend everyone else's money.

Have to disagree with you there, Brown is no socialist and socialist ideals do not necessarily involve over taxing the population.

[iranu]

May I ask you what is he in your honest opinion? Surely the fact that he wants the state to have far more control over our lives, taxes and spends, believes in centralisation and uses Soviet tractor factory management techniques i.e targets, to measure his success indicates that he leans that way.

[G4Z]

A fascist maybe?

And I mean that in the true sense of the word, authoritarian, pro big business and central planning of the economy.

Certainly not a socialist, I mean what kind of socialist would abolish a 10p tax band to give middle earners a tax break?

[joshwa]

I've just switched to capped prices gas and electricity - as recommended by money saving expert. Hopefully this should see my having cheaper gas and electricity for a while...

[Saracen]

Originally Posted by G4Z

A fascist maybe?

And I mean that in the true sense of the word, authoritarian, pro big business and central planning of the economy.

Certainly not a socialist, I mean what kind of socialist would abolish a 10p tax band to give middle earners a tax break?

One who thinks the population are too stupid to notice?

[Saracen]

Originally Posted by Koolpc

MP's would go up in arms if their allowances were stopped!!

The average guy in the street (Me!!) is being crippled by high taxes and extortionately high bills for fuel etc etc.

The government are greedy with the taxes etc. So are all the companies who hike up the cost of electric, gas etc. Not to mention the council tax bill that us poor people who have to pay it don't see any value in it.

Higher wages are needed to pay for the ever increasing bills. It is a vicious circle. Maybe we should all go back to being cave men!!

I largely agree with Iranu - and the fallacy in your argument (that we need pay rises to afford hiked prices) is that it assumes we're all entitled to our current standard of living. We aren't. If we (as a country) live beyond our means, we either have to tighten our belts or work harder, just like any household economy.

The trouble is, as a country, we've been living beyond our means for years, and paying for it with higher borrowing and increased debt. And it has been Gordon Brown and his much-self-publicised economic "stability" that has set us up for it.

If everyone demands pay rises to cover increased costs, koolpc, and they get them, all that happens is that those increased pay levels feed back into production system, costs rise and prices go up. Which fuels pay rises, which fuels rising costs, which fuels .... you get the idea. And, at the same time, people are cutting consumption in areas where they can, which means business is having a harder time with falling order books at the same time as it's costs are going up, both because of the current trends and because of those wage demands, and some businesses won't survive that. Others will survive it, but only by scaling back production. Both things mean job losses.

As a country, we can't afford pay rises just to keep ahead of price rises unless the country earns them. Just because we have a given standard of living doesn't mean we have a god-given right to maintain it. And if we pay ourselves more than we're earning, all we do is make things worse.

Unfortunately, I agree with our current Chancellor, at least on that point. We DO need wage restraint. Whether we tighten our belts and accept that standards may have to drop, or we all put in and get massive pay rises to cover those costs, we are in for a bad time. But just HOW bad, and how long it lasts, depends on whether we can be sensible or not. If we all try to maintain our current situation, we risk turning an economic downturn and a period of stagnation into a recession.

And also unfortunately, as happens most of the time, it's the least well-off in society that will suffer the most, because they're least able to tighten belts to make savings. After all, many people can, for instance, not buy that fancy flatscreen TV, not upgrade the car or cancel their plans for three weeks in the Caribbean this autumn, but if you couldn't afford to do those in the first place, you can't save much by cancelling them.


As a country, if we have any sense, we'll tighten pour belts, cut back on non-essentials, pay off debts (both domestic and government), and accept that things are going to be hard for a while. We'll accept that because we could afford it (whatever "it" is) last year doesn't mean we necessarily can this year or next year.

And it means some people are going to end up jobless. And some are going to end up getting their homes repossessed. And a lot are going to living standards decline. Personally, i that all that is now, to some extent, absolutely inevitable. But if wage demands, across the nation, are at a level to cope with real inflation and compensate for it, all we will do is make a bad situation much, much worse.

[Koolpc]

I live in an area / workforce who are definitely 'low paid'. Minimum wages with increasingly higher taxes etc. The 'fat cats' do not suffer like the low paid. We can't keep up with inflation, higher taxes, higher costs of living. The majority of low paid workers are not 'living beyond their means' as you put it Saracen, far from it. The ones i know are only just keeping their heads above the water!!

It is always harder for the low paid. How can you tighten a belt that is already on its last notch?

Higher taxes means more heartache, especially for those who are getting strangled by ever increasing bills.

It is not just about making sure wages go up accordingly. It is not just about everyone tightening their belts, no, it is about getting the big companies with their fat profits to cut their prices. Being made to do so. It is about the government being forced to cut taxes. It is probably about the people of the UK kicking Gordon Brown and his government out of office.

I can't see Labour getting in for another term. Not with the whole country up in arms about the ever increasing taxes etc.