Warning over utility bills

Utility bills for consumers are set to rise over the next ten years as a result of large-scale infrastructure spending, according to a new report from the National Audit Office. But it warns that neither the government nor industry regulators know by how much, or whether the bills will be affordable.

Key points

  • An estimated £310 billion of planned investment in infrastructure was identified in the government's 2012 National Infrastructure Plan. 67 per cent of this is expected to be financed privately, and repaid through consumer bills in the energy, water and telecoms sectors.
  • The available projections suggest that increases in both energy and water bills will continue to outstrip inflation, on average, up to 2030. The average household energy bill alone is expected to increase by £221 between 2013 and 2030 in real terms. This is particularly concerning, says the NAO, given that energy and water bills have increased significantly in recent years, while incomes have not.
  • Higher energy and water bills are likely to hit those households with incomes in the lowest 10 per cent particularly hard. In 2011, 15 per cent of total spending by low-income households went on energy and water bills, compared with just 8 per cent for the average household.

The National Audit Office expresses concern at the lack of a common approach across sectors to forecasting bills or measuring affordability. It recommends that the Treasury ensure there are mechanisms to assess the cumulative impact of infrastructure investment on consumer bills, particularly those paid by low-income households.

Source
Infrastructure Investment: The Impact on Consumer Bills, HC 812 (Session 2013-14), National Audit Office, TSO
LinksReport | NAO press release | Guardian report

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Publication date: 
Nov 13 2013