22 Oct 2012

What David Cameron should have said

Imagine going to fill up the family car at the garage and being confronted with a menu.

"Buy your first 10 litres for £2.00 and you can fill up the rest of the tank at just £1.15 per litre." Hmm, that sounds good. Or does it? Whilst you are trying to figure out if this is a good deal or not, you eyes alight on another option.

"Get your car serviced here and you can get 30p per litre off your petrol for six months." Excellent, you think. Except you now start wondering if its 30p off the first 10 litre price or the lower, follow-up price. Maybe it doesn't matter. Then there's another option.

"Pay by direct debit and we'll knock 5% off your annual bill." Gosh, this does sound good. A reward for loyalty. The more I spend, the more I save. You start to feel that you could spend your whole life cruising the motorways for free.

So you stand there on the forecourt not really knowing whether you are coming or going. You just wanted to fill up with petrol and you've ended up taking an IQ test and now you have a horrible feeling you've just failed.

I suspect you may know where this is going. Petrol and diesel on our forecourts may be horribly expensive but at least their purchase is a simple matter. You pay the price advertised on the sign.

Not so our domestic fuel bills. The menu of options described above is only the beginning for our gas and electric utilities. Most of them have 30 or 40 different tariffs, each with its own merits. When David Cameron made his off the cuff comment in the Commons last week about forcing energy companies to offer customers their lowest tariff, he stirred up a hornet's nest. Because the way fuel bills are constructed, it's almost impossible to tell what the best deal is. Price comparison websites can give you an indication of what would have been the best deal for you in the past, but have no way of knowing what the future deals will be, as the prices can and will change.

Of course, David Cameron has form on issues like this. So keen is he to appear to be a man of the people that he is given to making what he thinks are popular gestures which then turn out to be ill thought through. Or not thought through at all.

Had he called for energy bills to be simpler to understand, he might have been onto something. Had he demanded that the ludicrous two-tier tariffs, that all utility companies still base their billing on, be replaced with a petrol-pump style single price per kilowatt hour, he would have been making progress for all of us. At a glance we would be able to see who is offering what, and where we should place our money.

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