Time to get serious

In the eighteen months since the credit crunch began to engulf the UK economy, where have householders been hit hardest?

In the late nineties, household spending was growing at a rate of over 4.5% year on year. Ten years on, this figure has been reduced to just 1.9%. The fallout from the sub prime lending crisis has forced Britons to transform their cavalier spending habits to that of canny spendthrifts.

The economical volte-face has been driven by a number of factors, primarily rising energy costs, rising grocery bills, exorbitant fuel costs and narrowing credit capabilities. As the cost of living climbs and property values tumble, consumer confidence has wilted.

The big six energy suppliers raised their gas and electricity tariffs by an inflation busting 14% on average during winter 2007/08. These price rises were blamed on skyrocketing wholesale costs and record crude oil prices.

Gas and electricity costs are expected to jump again this summer. According to energy watchdog Energywatch, such are the overheads with which energy companies are grappling, these rises are necessary to prevent the energy suppliers from slipping into debt.

The days of cheap food supply also appear to be a thing of the past, as the cost of an average grocery basket of essential items took a £15 leap from May 2007 to May 2008. These increases are the product of supply problems in key producing countries, mainly caused by bad weather and an increase in the use of land to grow crops for biofuel.

Increasing food prices are forcing many consumers to use emergency payment methods. A spring survey by the Post Office revealed four in ten shoppers were using credit cards to pay for groceries, council tax and utility bills.

However, credit cards have become a precious and (in some cases) unattainable commodity. Banks have become reluctant lenders, resulting in a climate where only applicants with blemish free credit ratings are accepted for credit.

February saw online credit card supplier Egg cynically cull over 160,000 clients, in a move widely perceived as the disposal of unprofitable customers.

The narrowing mortgage market has additionally contributed to UK consumers’ financial woes, with first time buyers effectively excluded from the more competitive mortgage offers. As homeowners’ worries increased, record applications for mortgage debt advice were received by the Citizen’s Advice Bureau.

Leading mortgage providers such as First Direct began to pull their most attractive mortgages altogether during March/April 2008. The Co-operative bank and a number of smaller building societies followed suit, while Halifax raised rates and manipulated its acceptance criteria to punish those who couldn’t afford a substantial deposit.

So what happens in the future? Is the worst of the credit crunch over, as many analysts are predicting? Have we corrected our credit dependent spending enough? Could the next raft of energy increases be the straw that breaks the back of a fickle economy?

I’d love to hear your views.

 Shiny Happy People? Not exactly…

There’s something I just can’t let pass right now, and it’s a three pronged attack.

My bugbear bleeds neatly into yesterday’s npower bashing on Times Online, and I know I wanted everyone to stay positive and concentrate on the pleasing aspects of their energy supplier, but it’s possible today’s post may degenerate into something of a rant (I’m just so complex).

I’m taking the line ‘I know that this is vitriol, no solution, spleen venting’ from REM’s magnum opus ‘Ignoreland’ as my call to arms, so forgive me. I’m so mad i could throw a yoghurt at someone, even though i haven’t been mixing sleeping tablets with alcohol, and i don’t have an ego problem.

Ok, so it’s three pronged……….

(1) npower announced a new eco-friendly initiative yesterday called the ‘Climate Cops’ scheme. Effectively, it’s a series of lectures and practical courses aimed at young students in order to make them more ecologically switched on.

The campaign is fronted by the professionally chirpy Fearne Cotton, and the gainfully unemployed Piers Morgan, with Mr Morgan choosing the winning school at the end of the twelve month course. The school judged to have applied itself most unswervingly to its chosen green project will receive a cheque for £20,000, which must be spent on improving the school’s ecological infrastructure.

I digest the press release, I believe it to be a worthy cause and, despite the recent troubles npower has experienced, I think it’s a step in the right direction. So I write a news article on this development (see the ‘Energy News’ section), and proceed to go about my business in a typically eager and dedicated fashion.

Until……..

(2) …….it’s brought to my attention around mid-afternoon npower has raised online dual fuel tariff prices by a whopping 20%. Great, thanks very much for that, I’m really glad I fought your corner.

Essentially, the Sign Online 10 tariff has been scrapped, and replaced by the new, more expensive Sign Online 11 tariff.  A quick bit of maths in the office shows the Sign Online 11 tariff is still the cheapest on the market (by £10 from British Gas Click Energy 5), so all is not lost.

Like a scratched record (and not even a good one, this is like a scratched copy of ‘How can we be lovers if we can’t be friends’ by Michael Bolton) the same reason has been trotted out for this price rise as those we heard previously this year: escalating wholesale costs and exorbitant crude oil prices.

Which would be fairly easy to stomach, if……….

(3) ……Shell and BP hadn’t announced combined first quarter profits of £7.2 billion this lunchtime.

How much money do they want? What can you even do with £7.2 billion? There aren’t enough consumables in the world to spend that amount of money on! It makes me want to throw up, and I’m not even an anarchist or especially right on.

Right, let me just take a breath for a moment.

That’s better. The BP profit represents a rise of nearly 50% on last quarter, whereas Shell can boast only a paltry 12% gain. The increase has been driven by higher petrol and diesel costs set by the companies in the light of (you guessed it) rising crude oil prices.

Just to conclude, rather than absorb some or all of the rising crude oil costs, petrol companies have elected to rip us off at the petrol pumps, and energy companies have chosen to rip us off in our own homes.

Gee, thanks. Again.

I think I’ll listen to ‘Everybody Hurts’ now, just to cheer myself up a bit.

Anyone else feel like venting?

  European Students with Backpacks - Cool

….particularly a Mr. M Ballack of Kensington, West London.

Ok, that’s quite enough of that; I obviously don’t want to labour the point (Chelsea 2 – Manchester United 1). It’s not just the Germans I’m enamoured by anyway; I’m quite keen on the Norwegians since last Tuesday.

Putting all football allegiances to one side just for a moment, I’ll tell you why I still love the Germans, and steadfastly refuse to switch from my current (German) energy supplier, E.on.

A blog posting on Times Online this weekend invited Times readers to leave feedback concerning their energy suppliers, a kind of ‘open forum’ if you will.

Perhaps they were expecting a few responses along the lines of ‘they keep coming to read my meter at pesky times’ or ‘I think I was slightly over-charged last quarter’, but what they got was fire and brimstone launched from the mouth of hell itself!

The first comment is quite ominously titled ‘WHY YOU CANNOT AFFORD TO BE A CUSTOMER OF EDF ENERGY’, all in capitals of course. The author of this post goes on to describe a horror story that visits inaccurate direct debits and shoddy customer service via a series of payment duplications. No energy supplier is perfect, but this consumer does seem to be especially cheesed off.

Ok, so if I’m a little down on EDF right now, how about npower? I’ve heard all the brouhaha surrounding allegations of an npower sales team miss-selling door to door, but that’s only one team, and the rest might be fair. So what sort of comments did they receive from their loyal servants yesterday? Well….

‘We unfortunately agreed to change to npower. This month I have received a statement from npower informing me that I owe them £706.00. We feel tricked.’

‘I found that they had charged me twice for almost the whole of one year’s supply of gas.’

‘I was recently approached by a salesman for npower in my local Woolworths. A promise of £100 pounds credit convinced me to switch and sign on the dotted line. Bad move. The wool had been pulled over my eyes.’

This is a sample of the more ‘polite’ comments. Let’s be honest, they don’t make for great reading. The revelation that npower reps stalk their local Woolworths looking for victims already bedazzled by cheap duvet covers is bad enough.

A number of other suppliers came in for criticism also, with Scottish Power accused of ‘appalling service’, British Gas lambasted for punishing Saver 7 customers, and Scottish & Southern scolded for blindly signing up new customers days before a planned price hike.

The most intense ire is reserved solely for npower though.

Having spent considerable time over the weekend sifting through a list of endless energy wrath, is it naïve of me to want to concentrate on the positives rather than the negatives?

I’d like to focus on all the aspects you find pleasing about your energy supplier. I’ll start the ball rolling with my own contribution to the Times debate this weekend:

‘E.on supplies me with concise and easy to understand billing information, and I’ve never had to take issue with a bill I’ve received. The direct debits come out of my account on a pre-ordained day, and I’ve just received my online ‘energy tracker’, which allows me to check my energy usage on a daily basis. Although they’re far from the cheapest in my area, I’m happy enough with the level of service to stick with them.’

It’s an honest account, and I’m aware that against a backdrop of fuel poverty and the credit crunch, I could be accused of focussing on trivial issues. But it’s my point of view on my energy supplier.

So how about yours? Does anyone have anything positive to say? Or are you all feeling right royally ripped-off at this moment in time?

Please let me know.