The Financial Blog

Consumer watchdog Which? Say that now is the best time to swtich your home energy supplier as the last of the big 6 suppliers, Scottish and Southern Energy have increased their prices; see the blog from last week; http://www.thefinancialblog.co.uk/further-energy-price-increases

Siobhan Parker at Switch with Which? says: “This latest price increase is the green light to switch - everyone’s feeling the post-budget pinch and making sure you’re getting the best deal for your home energy is a smart and easy way to take some of the pressure off.

“If you haven’t compared your rate with the competition lately, now is the time.  We can help you compare prices, switch for free and save money.”

You can get hold of 500 Tesco Clubcard points if you buy your car insurance through tescocompare.com

This offer is available until 8th April 2008 and all you need to do is enter your Tesco Clubcard number with your other details when buying a policy online.

You can collect Tesco Clubcard points when you buy a car insurance policy from any car insurance provider quoted through the Tescocompare.com search results.

The 500 Tesco Clubcard points will show on your statement by August 2008, if not earlier.

If you are not a Tesco Clubcard holder and you purchase a car insurance policy from Tescocompare.com you can go in store and complete the regisration form. You need to return it via Freepost and get registered within 30 days then your 500 Tesco Clubcard points will be automatically credited to your account.

If you need further information on the Tesco Clubcard points and membership visit tesco.com or call the Clubcard helpline on 0800 59 16 88

Remember you get also earn Tesco Clubcard points if you pay in-store with a Tesco Clubcard Credit Card. 16.9 % Typical APR, variable.

Scottish & Southern Energy will increase it’s gas prices by an average of 15.8 per cent and it’s electricity prices by an average of 14.2 per cent.

Npower, British Gas, EDF Energy, E.On and Scottish Power have already increased their prices so Scottish and Southern Energy are the last of these bigger suppliers to do so; the increases will come into effect from 1st April 2008.

Yet again the increasem in prices has been blamed on the rise in wholesale gas and electricity prices. This is more bad news for homeowners having to stretch their monthly finances even further. Because we’re heading into summer it might not be until the winter months of 2008 before we all really get to see the increase in our winter energy bills.

Make sure you compare utilities providers compare utilities providers to get the cheapest gas and electricity deals…

Rather worrying I thought, Switch with Which? The idependent consumer advice web site say that where you live can affect how much you pay for gas and electricity.

In January Npower varied their gas prices in the UK according to the cost of piping it to your home. So amazingly if you just happen to live nearer wherever Npower begin piping gas in the UK you’re better off when it comes to your bill - how unfair is that for people who don’t live as close?! This is creating a ‘lucky dip’ for customers who have to pay the bills. Scottish and Southern Energy and Scottish Power have since introduced a similar ‘lucky dip’ bill system and British Gas are thinking about doing the same. It would certainly be a bit of positive publicity and a good way to attract new switching customers if one of these energy companies could prove they do not charge us for piping the gas around the UK. After all that’s part of their job and it should be factored into the maufacturing costs NOT passed onto the consumer by means of another bill increase.

Switch with Which? Say that as more gas suppliers adopt this pricing structure combined with the recent price increases, lots of people will have seen their home energy bills rise above inflation and smash the £1,000 per year mark!

Siobhan Parker at Switch with Which? says: “The adoption of regional gas prices by some suppliers further emphasises price variations around the country. Npower has announced an average gas increase of 12.8 per cent, but customers living in regions such as London and the East Midlands are being hit with a much bigger price rise of 23.8 per cent. People must vote with their feet and seek out the best deal to combat the effects of what is ultimately a postcode lottery.”

Moving house is one drastic solution to change tariff and lower energy bills, but there is an easier option. Websites such as www.switchwithwhich.co.uk allow people to compare thousands of tariffs on a regional basis to find a cheaper energy supplier. When switching energy suppliers you should also consider opting for an online tariff if you have internet access. An online tariff can be hundreds of pounds cheaper because the energy company doesn’t have the administrational costs involved with an offline account. Get comparing and switching now!

British Gas profits rose from £95 million in 2006 to a staggering £640 million for 2007.

So let’s just step back and think about this for a minute; British Gas increase prices by 15 per cent even though their profits were on target to increase by far more than 15%. Obviously the profit before their 15 per cent price increase was not enough and they simply decided to add an additional 15 per cent on for good measure!?

The average UK household spends 10 per cent or more of their monthly income on gas and electricity and the average bill is around £1,000. Tim Wolfenden of Uswitch.com said “The figures will inevitably cause a row and British Gas will struggle to justify the increases.

British Gas will need to give robust reasons for the rise in profits, not least that 2006 was a poor year.

This is acceptable to a point, but customers will see a big increase and they will want to know what is going on. Rising prices are really very serious for millions of people.

Consumers are not against suppliers making profits, but they feel it is unfair when price rises are coupled with such big increases in profits.”

In its defence British Gas said “In the last 6 months of 2007 higher wholesale gas prices have reduced British Gas operating margins to around 1 per cent.” They also said that at current wholesale prices they would be loss-making in 2008 without the increase.

We’ll wait and see then shall we!? I’d bet my mortgage they do not make a loss in 2008 and if they do I’m sure some of the £640 million profit from last year should help them out.

E.On or Powergen has today increased its gas prices by 15% and electricity prices by 9.7%.

Now is the time to switch energy suppliers! According to Which? The UK Consumer Association, with over 50 years experience in providing independent advice to consumers, energy suppliers have increased their standard tariffs more than their online tariffs. If you switch to an online account so there’s no paper bills involved, pay your bill by direct debit and go for a duel fuel product you can seriously reduce your energy costs.

Which? Have put together this basic switching guide;

Option 1 - Never switched before and are on an uncompetitive standard plan?
Switch now - you could save more than £300* by switching energy suppliers.

Option 2 - Switched in the last 12-18 months?
Compare your tariff against the current online, dual fuel tariffs paying by monthly Direct Debit for the most competitive option.

Option 3 - Switched recently and already on a good deal?
With each supplier’s price increase is the offer of a new fixed tariff, so consider switching to a capped tariff for certainty amongst rising prices.

There is a switching service from Which called SwitchWithWhich but also check out a few of the online comparison web sites like Uswitch, Moneysupermarket & SimplySwitch first to get a few quotes and tariffs to choose from.

Mobile phone users don’t know how many texts or minutes they use each month

A recent study by comparison website Moneysupermarket.com has revealed that Brits waste over £8 billion on additional texts and minutes in the following ways;

• 50 per cent of mobile phone users in the UK don’t know how many texts or minutes they use every month.
• 20 per cent of mobile phone users in the UK, more often than not, get a bigger phone bill than they were expecting.

This rakes in an astonishing £8.45 billion per year for the British mobile phone industry alone and it’s simply because people are on the wrong mobile phone tariff!

On average we use 23 voice minutes and 23 texts over our inclusive allowances each month. Basically it costs us around £130 each per year. I must admit I was running my mobile phone bill up every month like this, typically I would spend £5 to £10 over every month. It wasn’t ever really a lot of minutes or texts that I would over use but the mobile phone companes charge a higher rate per minute and per text if you go over your monthly inclusive allowance. Then you realise when your bills arrive.

I played around with my tariff, it was a Vodafone SIM card so I could change the tariff and pricing structure online after the first 3 months. This seemed to keep the bills lower but I’d usually end up going over the inclusive mintues and texts anyway.

Now I use o2 Simplicity. You buy a SIM card and pay a set fee per month for a set amount of minutes and texts. I’m paying £25 per month and get 600 voice minutes and 1000 texts. The good thing with o2 Simplicity is that you’re not tied into an 18 month contract. If I decide I don’t like my deal all I have to do is give 1 month written notice and o2 cancel the SIM card, easy!

Expect your energy bills to increase next year as most suppliers will pass on a rise in wholesale gas prices by increasing the price we pay. Analysts predict that By February 2008 prices will rise by at least 15 per cent.

Karen Darby from SimplySwitch.com, the price comparison and switching service, said: 

“Wholesale prices have been creeping up for some time now and several analysts are predicting gas bills to rise by at least 15 percent. Almost three quarters of UK homes are connected to the gas mains, so this will affect millions of people directly. However, it’s not just gas bills that are likely to soar. With 40% of the UK’s electricity generated by burning gas, a rise in wholesale gas prices means that electricity bills will rise too.

“Over the past year, wholesale gas prices have fallen by half, with wholesale electricity costs down by almost a third. Despite some highly-publicised price reductions, the major suppliers have only brought average bills down by around 15 to 20 percent. If energy prices rise as much as analysts are predicting, customers could be forced to pay an extra £131 per year in energy bills.*

“It has already been estimated that an energy price hike of just 10 percent would push 400,000 more households into fuel poverty. A rise of 15 to 20 percent would have an even more devastating effect, and more needs to be done to protect vulnerable households.

“Luckily, for those wishing to protect themselves from rising bills, there are some highly competitive capped deals available. In the past, capped deals were expensive, with customers paying way over the odds for their added peace of mind. Now, however, some capped tariffs are nearly as cheap as the UK’s best non-capped deals and charge no penalties if the customer wishes to leave.”

Visit simplyswitch.com for more details.

Recent research by Moneysupermarket.com reveals that 94 per cent of all 13 – 15 year olds in the UK have a mobile phone. Even 23 per cent of the 3 – 6 year olds have regular access to a mobile.

In terms of monitoring their children, 76 per cent of parents will only let their kids have a pay-as-you-go mobile phone. Surprisingly only 36 per cent of parents purposely stop their kids from accessing the internet and just 31 per cent bar premium rate telephone numbers.

Only 32 per cent of parents ban downloads like ringtones and wallpaper, surprising since the cost can be a few quid a time…

Head of mobiles at moneysupermarket.com, Rob Barnes said: “Buying a mobile phone for your child can provide peace of mind, as it makes them easily contactable. However, there are a number of factors parents should consider.

“After purchasing the phone, take heed of warnings regarding internet access and look into whether filters can be placed onto your child’s mobile in-order to bar access to specific sites.

“Buying your child a mobile phone is a difficult decision, and I believe there has not yet been enough development in the market to offer sufficient protection. With more children using mobile phones I would like to see more restrictions in place from the networks to prevent them being exploited.”

If you’re looking for a new mobile phone try www.onecompare.com too…

A company called Thinktank , the Resolution Foundation has put together a study of the major personal finance comparison websites and is calling for a code of conduct.

The report states that they provide an extremely valuable service but is quick to state that the sites are undermined by a lack of transparency about their commercial relationships. As such a voluntary code of conduct is called for as the market continues to grow to avoid the need for regulation.

I guess the question that comes from this is what exactly do they want these companies to do? Moneysupermarket states it receives fees in it’s legal boilerplate and Moneyexpert has a piece about adhering to a charter, however the major point of the charter:

“Observe transparency on provider fees and charges.”

Doesn’t seem to be adhered to on Moneyexpert as I didn’t manage to find a page which had any admission that hey were paid a commission by the product providers listed.

Realistically though what would a code of conduct say about pricing transparency? Big banners at the top of every page which says “We get paid from these suppliers and may not list providers who don’t pay”? That’s just unrealistic and undermines their business model

Maybe they expect every comparison to include every provider - no matter how small or whether or not they will pay, which will be a nightmare to keep up to date and will surely mean that the companies listed will squeeze down how much they pay until it puts the comparison businesses in trouble.

Perhaps it should say whenever you buy a product - “we receive 8% commission on the secured loan you’ve just taken out”. That will surely anger customers who think that some savings should be passed onto them.

Overall I think this code of conduct is unrealistic and could well put comparison service businesses in jeopardy which ultimately robs us as consumers of some great tools that we can use to shop around.