{"id":34822,"date":"2023-06-23T07:59:31","date_gmt":"2023-06-23T06:59:31","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=34822"},"modified":"2023-06-23T07:59:31","modified_gmt":"2023-06-23T06:59:31","slug":"chancellor-calls-on-uk-utility-firms-to-pass-cost-savings-on-to-consumers","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2023\/06\/chancellor-calls-on-uk-utility-firms-to-pass-cost-savings-on-to-consumers.html","title":{"rendered":"Chancellor Calls on UK Utility Firms to Pass Cost Savings on to Consumers"},"content":{"rendered":"<p>The Government&#8217;s Chancellor, Jeremy Hunt, will next week meet with the heads from all of the UK&#8217;s major regulators as part of a drive to help bring down inflation by encouraging utility providers (i.e. energy, water, broadband and mobile) to ensure they&#8217;re passing on any wholesale costs savings to consumers.<!--more--><\/p>\n<p>The issue, at least so far as the government sees it, is that utility providers are often quick to hike their prices when costs are high, but not so quick to lower them when their underlying costs fall. This is seen as being a particular problem for consumers who might find themselves being locked into a long-term contract that was signed during a period of peak costs.<\/p>\n<div class=\"bq2\"><strong>NOTE:<\/strong> Senior figures from the Competition and Markets Authority (CMA), <a href=\"https:\/\/www.ispreview.co.uk\/index.php\/link\/ofcom\" target=\"_blank\">Ofcom<\/a>, Ofwat and Ofgem are expected to attend the meeting.<\/div>\n<p>According to the <a href=\"https:\/\/www.telegraph.co.uk\/politics\/2023\/06\/22\/jeremy-hunt-utility-firms-pass-savings-consumers-inflation\/\" target=\"_blank\" rel=\"noopener\">Daily Telegraph<\/a> (paywall), the Treasury wants to hear directly from regulators about what is happening with input costs in each sector and how the link to consumer pricing could be made more efficient, which might theoretically help with their drive to bring down inflation.<\/p>\n<p>All this is needed to help support the UK Prime Minister, <strong>Rishi Sunak<\/strong>, and his pledge to &#8220;<em>halve inflation<\/em>&#8221; by the end of 2023 (i.e. pushing it down to around 5%), which currently isn&#8217;t going in quite the direction he might have wanted.<\/p>\n<blockquote class=\"bq1\"><p><strong>Jeremy Hunt, UK Chancellor, said:<\/strong><\/p>\n<p>&#8220;Next week, I will meet with regulators to discuss how we can make sure falls in input costs are passed onto consumers. I will discuss what action regulators are taking, and how we go further to reduce inflation and ease the impacts of the cost of living.&#8221;<\/p><\/blockquote>\n<p>However, the approach being taken here appears to have more relevance for energy providers than it does to the much more complicated nature of broadband, phone, and mobile provision, where many different and diverse factors can impact the price we all pay. Equally, wholesale pricing generally follows a much more predictable and gradual upward curve for telecoms, which is partly linked to the impacts of inflation itself and the capabilities of the service being sold.<\/p>\n<p>On top of that, mobile operators and broadband ISPs also have to deal with rising supplier and lease costs, as well hikes in energy prices and the ever-rising levels of consumer demand for data. Not to mention the cost of adding new services, upgrading networks (<a href=\"https:\/\/www.ispreview.co.uk\/index.php\/link\/fttp\">FTTP<\/a>) and implementing costly new <a href=\"https:\/\/www.ispreview.co.uk\/index.php\/link\/ofcom\" target=\"_blank\">Ofcom<\/a> rules or Government legislation.<\/p>\n<p>For example, the Government and <a href=\"https:\/\/www.ispreview.co.uk\/index.php\/link\/ofcom\" target=\"_blank\">Ofcom<\/a> have recently been pressing more and more ISPs to introduce cheaper and faster <strong>Social Tariffs<\/strong> for those on state benefits (<a href=\"https:\/\/www.ispreview.co.uk\/index.php\/2022\/08\/a-quick-guide-to-uk-social-tariffs-getting-broadband-for-15.html\" target=\"_blank\" rel=\"noopener\"><strong>A Quick Guide to UK Social Tariffs &#8211; Getting Broadband for \u00a315<\/strong><\/a>). On the one hand this is welcome, but on the other hand it adds to their costs and that has to be recouped from somewhere (e.g. rises in customer bills for non-social tariff users).<\/p>\n<p>Suffice to say that communication providers are already facing a squeeze and if the government really wanted to help then it could perhaps consider reducing the rate of <strong>Value Added Tax<\/strong> (VAT) on broadband and mobile packages from 20% to 5% (even if only for social tariffs). But so far, the idea of providing such help to the sector has generally been ignored. Banning mid-contract price hikes might be nice too.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Government&#8217;s Chancellor, Jeremy Hunt, will next week meet with the heads from all of the UK&#8217;s major regulators as part of a drive to help bring down inflation by encouraging utility providers (i.e. energy, water, broadband and mobile) to ensure they&#8217;re passing on any wholesale costs savings to consumers.<\/p>\n","protected":false},"author":1,"featured_media":26696,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1],"tags":[36,38],"class_list":["post-34822","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk_isp_news","tag-ofcom-regulation","tag-politics"],"share_on_mastodon":{"url":"","error":""},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Chancellor Calls on UK Utility Firms to Pass Cost Savings on to Consumers - 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