Gov Outlines Winter Support

A freeze on electricity prices, more targeted support and the capping of bus fares form part of the gov’s support package for islanders this winter.

However, the Treasury Minister Dr Alex Allinson has warned ‘there is no single solution, no one right answer’.

The support, unveiled this morning, includes a loan package to Manx Utilities to prevent an enormous increase in electricity prices.

Coming with the warning that gov can’t help everyone, the decision to freeze electricity prices 22p per unit, comes after Manx Utilities warned it would have needed to increase tariffs by between 70% and 90% in the autumn, up to 37.4p per unit, leading to an increase of around £500 to the average household bill.

This is largely due to the volatility of global gas markets, which has only worsened since the Russian invasion of Ukraine and the island’s reliance on the fossil fuel to generate electricity. 

Considering this, the Council of Ministers says it directed Manx Utilities to freeze the cost per unit until March 31 2023. However, this comes with a warning that prices will have to increase in April. 

To fund this freeze, the taxpayer will lend the taxpayer owned utility company up to £26m, with the loan to be repaid over a 20 year period. 

Dr Allinson said: ‘Unlike gas and oil, electricity is used by everyone on the island, including businesses, meaning all will benefit from this intervention.

‘We are shielding household, businesses and organisations from what would have been a sharp and sudden increase in electricity cost of between £16m and £26m by March next year.

‘Instead, people will have that money in their pockets this winter. It is a considerable sum which will help people and businesses to meet rising costs and means this money can circulate in our economy, boosting both consumer and business confidence.’

Dr Allinson said that the gov’s aim is to ‘flatten the curve’ of the cost of living increase and provide a level of certainty to islanders. 

He added that while the impacts of the cost of living crisis are being felt around the world, we have to all recognise that there is no single answer. 

‘In addition to the measures set out today, we will also monitor developments across the water,’ Dr Allinson said.  

He added: ‘The UK will have a new prime minister at the start of September and measures such as a cut in VAT rates would be reflected here on the island. These are challenging times, but the Council of Ministers believes this package of support will help everyone in our community, including businesses, whilst also specifically targeting those who are likely to feel the most pain.’

Support 

Having already announced £2.6m in support for those at higher risk of fuel and food poverty for October 2022, the gov says it will be providing further support in December to people in receipt of child benefit and certain income-related benefits. 

Exactly what shape that support will take and how much is still to be determined, with the gov saying it will make further announcements closer to the time. 

Dr Allinson said: ‘Whilst we know everyone will feel the increase in the cost of living this winter, those on lower incomes and those with children are particularly vulnerable. We know those on lower incomes will be harder hit as they spend a higher proportion on food and fuel costs compared to those on higher incomes.

‘The energy support payments and family support payments were designed to target those who are at a greater risk of falling into food or fuel poverty and so government has decided it is right that we repeat some form of payment to these households and families in December.’

The gov has also announced that it will create a £100,000 fund for community groups to access in order to run events through the winter that will give people somewhere warm to go if they worry about putting their heating on at home. To us, this sounds a bit like all huddling together like penguins for warmth, hence our name for it, the ‘Penguin Fund’.

A separate domestic events fund will also be offered later in the year.

Bus Fares

Under the support announced, the gov will run a three-month trial of capping bus fares at a maximum of £2 per journey (can anyone else just hear Devon Watson saying they should be free?), both for people who buy prepaid tickets and for those who pay on the bus. 

We don’t yet know about Night Owl services, but £4 for a bus home after a night doing karaoke in The Albert sounds alright to us.

As well as helping with transport costs, the gov also hopes this will encourage people to leave their cars at home and switch to public transport.

There is scope for this scheme to extend this beyond the three month trial, which is estimated to cost £170,000, depending on how the scheme works out. 

Dr Allinson said: ‘We have seen record fuel prices in recent months and although these have started to come down, the affordability of transport is a concern for a growing number of people, especially when factoring in other rising costs.

‘We hope this trial will encourage more people to take the bus, with the offer of cheaper journeys for many commuters and no parking fees.’

Efficiency

Work to improve energy efficiency in homes will also be accelerated with £8m in existing funding available. 

Materials and equipment such as insulation, LED lightbulbs, draft excluders and thermostatic radiator valves will be available free of charge to those on lower incomes, with the potential to help up to 12,000 households.

In addition, a fund will be created to make the island’s social housing stock more energy efficient and, subject to Tynwald approval, the Green Living Grant Scheme will be modified to include low-carbon heating alternatives such as air-source heat pumps.