So Gordon Brown has decided that the best way to reduce energy bills is to provide free cavity wall and loft insulation to the poorest households. Discounts on household improvements are on offer to everyone else. Laudable as this is, the big question remains: will it work? The Government's record of running schemes to promote energy efficiency is not encouraging.
One of the central planks of Mr Brown's plans is to extend the existing Warm Front programme to an extra 40,000 households. This is supposed to provide pensioners and those on benefits with help to make heating and insulation improvements.
However, shoddy workmanship and poor management has left thousands of vulnerable individuals, who have already attempted to claim, out in the cold. Age Concern, the charity, says that it has come across many cases in which delays to work have left pensioners without heating. Others have had to pay to remedy poor workmanship.
Alternative schemes have also been plagued with problems. The offer of grants to help households to generate their own power had to be suspended because the Government underestimated its popularity. The fear is that the Prime Minister's latest plans will descend into similar chaos, meaning that it will be years before households receive help.
For most of us, this is nothing more than an irritation. But the five million people in fuel poverty - meaning that they spend more than 10 per cent of their income on energy bills - do not have the luxury of being able to wait. The measures could actually exacerbate the problem, as they will be funded by a £910 million levy on energy companies. Mr Brown's claim that this will not be passed on to consumers is nothing more than hot air. The expense will almost certainly be added to domestic bills, which are already expected to rise significantly next year.
If the Chancellor really wants to help the fuel-poor he should insist that energy suppliers put pensioners and the poorest households on their cheapest tariffs. With more than 30,000 people dying each winter because of cold-related illnesses, more action is needed - and fast.
Take care with investment plans that play on your fears
Don't invest in anything you don't understand. Sage advice, but words that investors seem to have thrown to the wind.
Those of a more nervous disposition have been piling into “safe haven” plans that claim to protect capital from share price falls. Fund managers and banks that offer these protected funds are on course for record sales this year and have been scrambling to introduce new schemes to lap up the demand. Even National Savings & Investments, the Government's savings arm, has got in on the act with its guaranteed equity bonds.
The appeal of the schemes is easy enough to understand. Returns are linked to a stock market index or basket of shares, but if the market slumps you are guaranteed, in most cases, to get your money back. For advisers who recommend the products there is the promise of attractive commission, too.
But I wonder how many of those investors who have been won over by the hype really understand what they have bought. Drill down beneath the surface and the way that returns are calculated is enough to baffle a maths professor. “Returns averaged over the final 12 months”, “caps on growth”...well, I think you get the message.
On top of that, the sales pitch claiming that they offer “stock market returns” is stretching the truth. New research by the Investment Management Association (IMA) compared the performance of five protected funds that matured recently with that of conventional funds tracking the FTSE 100 index. In all cases you would have been better off with the tracker because the protected funds underperformed the FTSE by about
4.5 per cent a year. The IMA has an axe to grind, of course, as some of its members have been losing business because of the rush into protected schemes. But that does not change the fact that protected plans seem designed to disappoint. If you are worried about further stock market falls, my advice is to keep your money in cash. If you expect a market rally, you would be better off with a regular tracker. At least you know what you are buying.
A faint glimmer of light at the end of a very long tunnel
Millions of individuals with investments in closed “zombie” with-profits funds have hardly been affected by the stock market storms. Years of neglect meant that the returns they were receiving before the credit crunch were appalling and, you've guessed it, they are still terrible now.
But there are encouraging signs that action is being taken to improve the situation. Many of the funds are now run by Pearl Assurance, which has announced that it is planning to restructure its National Provident Life Ltd (NPLL) fund. The fund has suffered dreadful returns, partly because some investors have policies with expensive guarantees. To ensure that these guarantees can be met, it has had to invest very cautiously. Now Pearl plans to remove the guaranteed policies to a separate fund. This should allow more of the NPLL fund to move into shares, boosting the chance of better long-term growth.
It is a promising move, but any turnaround in fortunes is likely to be many years off. If I were an investor I'm not sure that I could be bothered to wait.
