Government bans cutting off electricity to most vulnerable households

Moncloa Palace, Madrid

The Council of Ministers approved a Royal Decree-Law establishing a new mechanism to finance the electricity bono social [special discount rate] and several measures to protect consumers, particularly focussing on the most needy.

The Minister for Energy, Tourism and Digital Agenda, Álvaro Nadal, highlighted that the text, which will have to be approved by the Lower House of Parliament, derives from the agreement reached between the different political forces to resolve "a highly complex problem".

Firstly, the new legislation guarantees the financing of the bono social, which at present consists of a 25% discount in the final electricity bill, which some 2.3 million households benefit from, including families with all their members unemployed, those receiving minimum pensions, large families and consumers with less than 3 kW of power contracted.

According to the minister, the bono social was paid by the parent companies of those electricity suppliers who were integrated in large groups - 94% of the market - but the Supreme Court ruled back in October that this system was discriminatory because it did not include the other 6% of suppliers. The new legislation approved on Friday includes 100% of the supplier market that operates in our country, such that the parent company or, in their absence, the supply company itself will cover this special discount rate. Hence, the electricity sector will continue to pay for this special discount, underlined Álvaro Nadal.

Most vulnerable consumers

Now that the financing is guaranteed, the Royal Decree-Law introduces various new features so that the government, through its regulatory development, can heighten the protection of electricity consumers.

Pool Moncloa/JM CuadradoFirstly, it provides the possibility for a broader definition of 'vulnerable consumer'. While 7 million people form part of this category at present and receive the same 25% discount in their invoice, this may be divided in the future into different groups, according to income, and thus receive different levels of aid. This change will come into force, according to Álvaro Nadal, "as soon as we approve the legislation, which must be discussed and debated by the political forces because this is an incredibly sensitive issue".

Secondly, the period for cutting off the electricity supply to certain consumers is increased from two to four months, "in categories still to be determined", pointed out the minister. In the case of households in a situation of particular vulnerability, those that are attended by social services, the new legislation establishes a ban on cutting off the supply.

Álvaro Nadal specified that when an electricity company finds itself with an unpaid debt, it must immediately notify the consumer, which is not obligatory at present. From that point on, a period of two to four months will elapse, depending on the category of consumer, before the supply can be cut off. Electricity companies will have to contact the social services department of the corresponding regional government to ascertain whether it is a consumer in an extremely vulnerable situation; should this be the case, it may not cut off the supply. The regional government or local authority will take over the payments and debts, which will be co-financed by the bono social.

This Royal Decree-Law also improves the conditions of the supply to consumers as a whole, particularly through the creation of an indicator that will allow them to compare the different offers available, as takes place with mortgages in the financial sector.

Álvaro Nadal recalled that the process to implement this will need to pass through the hands of the European Commission, the National Markets and Competition Commission and the Council of State. The government, he remarked, will try "to discuss these developments with the other political forces as soon as possible and ensure that the system is operational in the near future".

Youth Guarantee

Pool MoncloaJM CuadradoThe Minister for Education, Culture and Sport, and Government Spokesperson, Íñigo Méndez de Vigo, highlighted that the government has continued with the work plan agreed at the meeting held between the President of the Government, Mariano Rajoy, and the social stakeholders on 24 November. This dialogue translated into the approval of a Royal Decree-Law on urgent measures to boost the National Youth Guarantee System.

The measures, which were also agreed at the Employment and Labour Affairs Sector Conference on 19 December, are aimed at increasing the number of people joining up and registering with the National Youth Guarantee System and incentivising the employability and work of young people.

Íñigo Méndez de Vigo reported that there are just over 400,000 young people registered with the National Youth Guarantee Fund out of more than 1 million potential beneficiaries, and that the legislation approved on Friday seeks to simplify the registration process. "It will be enough not to have received training or not to have worked the day prior to the application to be included".

The minister also pointed out that the Royal Decree-Law "establishes the conversion of reductions in National Insurance contributions to discounts charged to the budget of the State Public Employment Service".

Spain was one of the European countries to approve the plan to implement the Youth Guarantee. The European Commission allocated it 2.36 billion euros until the year 2020. Íñigo Méndez de Vigo announced that the European Parliament may approve an additional allocation of 900 million euros. "We are talking about a very significant amount, some 3.26 billion euros in total".

The Government Spokesperson underlined that the fight against youth unemployment is heading in the right direction. "Between us all, we have managed to reduce the youth unemployment rate by 15 points, according to the Labour Force Survey (Spanish acronym: EPA); youth employment is growing at a rate of 7.4%, more than double the national average; one in every three young Europeans leaving the unemployment queues is doing so in Spain, according to Eurostat. In addition, the number of young people signing permanent employment contracts has increased by 30% on the figures for 2011".

Stability target of regional governments

Pool Moncloa/JM CuadradoThe Council of Ministers ratified the budget stability and public debt targets of the regional governments for 2016 and for the period 2017-2019 agreed on Thursday at the Fiscal and Financial Policy Council.

Íñigo Méndez de Vigo recalled that the individual deficit target for 2016 was established at 0.7% of the Gross Domestic Product (GDP) of the autonomous regions. Furthermore, the deficit path for the regional governments is set at 0.6% of GDP for 2017, 0.3% for 2018 and zero for 2019. In his opinion, "this is a good agreement for strengthening Spain's credibility with the financial institutions and our partners in the European Union".

On another note, the regional governments will receive a total of 4.55 billion euros of liquidity through the Regional Liquidity Fund (Spanish acronym: FLA) and almost 120 million euros from the Organisation Fund for local institutions, according to the agreement reached on Thursday by the Government Committee for Economic Affairs.

Aid for areas affected by flooding

The Council of Ministers declared the Region of Valencia, the Region of Murcia and the Balearic Islands as "areas seriously affected by a civil protection emergency", as well as the provinces of Almeria and Albacete, following the floods that have taken place since 17 December.

The Government Spokesperson specified that this comprises "economic aid for personal injury, damages to primary residences and furnishings, damage to industrial and commercial premises, to agricultural and livestock holdings, and sets up preferential loans subsidised by the ICO [Spanish Official Credit Institute], tax breaks and measures of a labour and social security nature".

Íñigo Méndez de Vigo recalled that the Council of Ministers adopted a similar agreement for those affected by flooding in other areas. The improvements included in the agreement adopted on Friday will also apply to them.

Conference of Regional Presidents

Pool Moncloa/JM CuadradoThe Government Spokesperson highlighted that this legislature of dialogue is leading to major parliamentary agreements, such as the ratification by the Lower House of Parliament of the Decree Law to extend the schedule to implement the Constitutional Law to Improve the Quality of Education (Spanish acronym: LOMCE).

He remarked that regional dialogue continued on Wednesday with the preparatory meeting for the 6th Conference of Regional Presidents, to be held on 17 January, that was attended by the Vice-President of the Government, Soraya Sáenz de Santamaría, the Minister for the Treasury and Public Function, Cristóbal Montoro, and the Councillors for the Presidency of the regional governments.

Íñigo Méndez de Vigo explained that the Conference of Regional Presidents will comprise two parts, one of deliberations, with a speech from the President of the Government on national affairs and issues related to the European Union. The second part will comprise decision-making and will tackle issues related to the sustainability of the Welfare State, demographic trends, education, civil protection, market unity, social discounts and cards, European projects and the future regulation of conferences of regional presidents.

The minister announced that the agenda is not closed and a new preparatory meeting will be held on 11 January. "We want to do this with the consensus of all parties".

Mortgage 'floor clauses'

The government analysed a report presented by the Minister for Economic Affairs, Industry and Competition, Luis de Guindos, on the ruling handed down by the Court of Justice of the European Union on reimbursement of the so-called 'floor clauses' for mortgages.

Íñigo Méndez de Vigo declared that "the government respects judicial decisions" and that the relations between financial institutions and their clients are "private". However, he clarified that "the banking sector in Spain is sound" and that it is the government's intention "to help resolve these issues swiftly". In this regard, the Council of Ministers plans to approve a code of good practices on 30 December.

Other agreements

The Council of Ministers agreed to extend the participation of military units and observers on operations outside of the national territory until 31 December 2017. It also authorised the signing and provisional application between Spain and the European Molecular Biology Laboratory of the agreement to establish a branch in Barcelona. It also approved the concession of 21 Gold Medals for Merit in the Fine Arts, for the year 2016.

Current affairs

Pool Moncloa/JM CuadradoThe Government Spokesperson began the press briefing by remembering the people and Government of Germany over the attack carried out on Monday, 19 December, in a Christmas market in the centre of Berlin, in which 12 people lost their lives and another 48 were injured.

The aim of terrorism, said Íñigo Méndez de Vigo, is "to impose fear on society, to divide and fragment it, to make it doubt its ideas and its principles and to radicalise it". Under no circumstance can terrorism "make us go back on or renounce the principles and values that have forged our civilisation and that constitute the hallmarks of the European institutional political system based on democracy and the rule of law", he added.

When asked about the latest rulings handed down by the Constitutional Court on certain initiatives from the Regional Government of Catalonia, the Government Spokesperson stressed that the government "always respects and upholds" judicial rulings and has asked for others to do the same, "because that is what is done under the rule of law".

As regards the possibilities of holding a referendum in Catalonia on its independence, he stressed that "no referendum will be held because that is anti-Constitutional", and added that the aim of the government is "to resolve people's problems" through dialogue - "which already is and will be a constant feature of this government" - and maintain "the door open and its hand outstretched" to everyone.