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In Practice: Be the honest broker

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Many people are wondering if they are going to be able to afford to keep warm this winter. The high, and rising, cost of energy is a significant contributor to fuel poverty.

More from: LGC View: Energy

According to the latest fuel poverty statistics more than 300,000 (almost 10%) of London households live in fuel poverty. And more detailed studies show that this may be a conservative estimate. Living in a cold home increases the risk of ill health, particularly for our most vulnerable residents.

Switching energy supplier is relatively easy to do and can help with costs but people are still not taking advantage of this in large numbers. We know that those most in need are least likely to shop around. One answer is collective switching, where a group of consumers use their collective bargaining power to negotiate a better deal. The deal is brokered by a third party, a switching provider, at an auction and new tariffs are offered to everyone who registered.

London Councils, with Kingston-upon-Thames RBC leading, worked with London boroughs on a collective energy switching scheme called The Big London Energy Switch, with government funding. More than 26,000 households registered.

We commissioned the Energy Saving Trust to evaluate the outcomes of that first auction and the findings show that the scheme was effective at engaging with vulnerable residents, with over 40% of those who registered likely to benefit. But the evaluation also found registrants were unhappy with the tariffs offered by the energy companies, which were not competitive enough.

An encouraging message is that council brands and local engagement are strong and the most effective way of reaching residents; over 70% of registrants heard about the scheme through a local government engagement channel.

Looking to the future, Ofgem’s retail market review reforms, designed to make the market simpler and fairer for consumers and implementation, should mean energy suppliers offer cheaper, tailor-made tariffs.

The next auction for the Big London Energy Switch will take place on 19 November, so residents can switch before the coldest months arrive. While primarily aimed at vulnerable residents anyone can join at www.biglondonenergyswitch.org.uk.

Nishma Malde is head of transport and environment policy for London Councils

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