Scrap green taxes on energy bills, say MPs demand: Levies could add a third to …

July 29, 2013 by  
Filed under Green Energy News

  • MPs call price hikes to fund green energy ‘perverse’
  • They say poorest families will take the brunt of the financial burden
  • MPs also claim Ofgem is not holding energy companies to account
  • Ofgem has rejected any suggestion that it was ‘falling down on the job’

By
Jason Groves and Nick Mcdermott

19:39 EST, 28 July 2013


|

04:03 EST, 29 July 2013

Swingeing green stealth levies on energy bills are ‘perverse’ and should be scrapped, MPs warn today.

A major report says the taxes are hitting poorer families hardest.

MPs also call for middle-class pensioners to lose their winter fuel allowance, with the savings redirected to help low-income households insulate their homes.

And they attack the regulator Ofgem for failing to hold energy firms to account for soaring prices.

Ministers have been accused of using stealth taxes to fund the huge subsidies given to green energy firms

Ministers have been accused of using stealth taxes to fund the huge subsidies given to green energy firms

The findings come in a report by the Commons energy and climate change committee, which warns that, based on Government estimates, green levies will add a third to electricity prices by 2020 – even before expected rises in wholesale prices are factored in.

Ministers have been accused of using stealth taxes to fund the huge subsidies given to green energy firms – needed to meet controversial carbon reduction targets set by the last government.

MPs warned that most families have no idea what the green energy drive is costing them, adding: ‘There is no widespread understanding by consumers of how much of their bills is made up of levies.’

The average family pays £1,267 towards energy bills, with £112 comprising green taxes – £18 of which is directly spent on subsidising wind farms.

By 2020 the contribution will have increased by more than 150 per cent, with each household required to pay £286 as part of their bills, according to the Department for Energy and Climate Change.

The committee’s report says:
‘Increasing use of levies on bills to fund energy and climate policies
is problematic since it is likely to hit hardest those least able to
pay.’

MPs suggested that if
the green subsidies were to continue they should be funded through the
tax system, which is more transparent and ‘less regressive than the
levies’.

The
report questions the repeated claim by ministers that families will see
lower bills as a result of Government policies, which include measures
to promote energy efficiency.

It calls on ministers to start an ‘honest conversation about the fact that energy bills are highly likely to continue to rise’.

The report questions the repeated claim by ministers that families will see lower bills as a result of Government policies, which include measures to promote energy efficiency

The report questions the repeated claim by ministers that families will see lower bills as a result of Government policies, which include measures to promote energy efficiency

Since 2007, average prices of gas and
electricity have increased by  41 per cent – 20 per cent in real terms –
leaving millions of households in ‘fuel poverty’. MPs warned that the
public’s ‘deep mistrust’ of energy providers will continue unless they
show greater transparency and reassure households that high prices are
not fuelling excessive profits.

Dr
John Constable, director of the Renewable Energy Foundation, said:
‘There is little or nothing to be said in favour of energy bill levies.

‘They
hurt the poor most, they reduce competition in the energy markets and
make supplier switching less effective – and by camouflaging government
taxation they reduce democratic accountability. If the levies were
cancelled tomorrow, no one would shed a tear.’

The report re-opens the debate over
whether better-off pensioners should continue to receive the winter fuel
allowance, which is worth up to £300 a year.

David Cameron has ruled out any change to the system before the election in 2015.

But the cross-party committee urged
ministers to introduce ‘better targeting of the winter fuel allowance
through means testing’ and to consider ‘how savings could be used to
boost investment in energy-efficiency programmes’.

Since 2007, average prices of gas and electricity have increased by 41 per cent ¿ 20 per cent in real terms

Since 2007, average prices of gas and electricity have increased by 41 per cent ¿ 20 per cent in real terms

MPs also said they were ‘disappointed at Ofgem’s slow progress’ in forcing the energy giants to reveal how much they were making from household bills.

The regulator must ‘use its teeth’ and force energy firms to explain the reasons behind price rises, the report says.

But Sarah Harrison, of Ofgem, said the watchdog welcomed the report and rejected any suggestion that it was ‘falling down on the job’.

‘We agree with the committee that the energy companies have been poor in communicating with and accounting to customers but that’s why we’ve been leading the way on transparency,’ she told BBC Breakfast.

‘We require the energy companies to report where their costs are and where they are taking their profit across different parts of their business.’

She added: ‘We are here not to be nice to anybody in particular or indeed tough to anybody in particular.

‘We are here with one goal in mind, which is to protect customers, and we will use the full range of powers we have got to do that.

‘That includes taking penalty action against companies who fail their customers – and they do.’

Providers also were criticised in the report for ‘falling far short of what is required to increase transparency and improve consumer trust’.

MP John Robertson, who sits on the energy and climate change select committee, said there is a lack of competitive pricing between the big energy companies.

Speaking on Radio 4′s Today programme, he said: ‘The fact of the matter is we have six large companies that charge roughly the same and have the same increases but they are meant to be in competition with each other.

‘If you think six companies will all work in the same way with the same rises and profits, I don’t think that’s right.

‘Supermarkets try and undercut each other to prove they are the best but it seems to be about how much they [the energy companies] can make and to make it as high as possible.’

Energy Secretary Ed Davey rejected the suggestion that ministers were misleading the public over the impact of green energy measures on bills.

He said: ‘Our policies to support renewable energy and reduce energy waste are insulating consumers from the rising cost of  fossil fuels. And by 2020, our analysis shows household energy bills will on average be £166 lower than they would be if we did nothing.’

The trade association for the energy industry said profits were necessary for employment and investment in new power stations.

Angela Knight, chief executive of Energy UK, said: ‘We have seen radical change – there are fewer tariffs and the new deals are clearer so it is easier to compare, bills have been simplified so they are easier for customers to follow and it is simple to switch from one supplier to another.’

The comments below have not been moderated.

At last they some of them are talking sense for a change green taxes are a burden that has been put upon us to fund those stupid windmills they will not in time serve any purpose at all they spoil all of our landscapes

bre645
,

wolverhampton, United Kingdom,
29/7/2013 17:32

when has mps ever thought or worried about the poor,they only think of themselves,they make me laugh,vote ukip.

cocotkd
,

glasgow, United Kingdom,
29/7/2013 17:28

Thanks to Clegg and Cameron, those two wonderful guys who want to rescue the planet, we the taxpayers are subsidising a massive amount to all their weird tree hugger ‘green’ initiatives and will be for the next 20-50 years. It is time that EVERY gas, electricity and any other energy utility bill showed the numerous items that we are all taxed on – actual usage (Therms, etc) UK and import costs, price/therm/KW, price from the supplier, extra costs from green initiatives added by the Government (includes windfarm subsidies, land subsidies, water generation, house improvements, etc, etc and then VAT. The whole would then help highlight exactly how much these idiotic MPs have signed over to maintain their green egos. If the Government really wants to help people, then they should reduce VAT for pure utility costs to, say, 5%. The same goes for petrol at the pump – all prices should show every government addition to the basic operating cost.

Hendonman
,

London, United Kingdom,
29/7/2013 17:26

Dibble, Newcastle upon Tyne, 29/7/2013 6:46

Haven’t you worked it out yet, deary. It’s all a con!

- Alan C, Liverpool, 29/7/2013 9:04

Fracking may be all that’s left when the windmills all fall down!

- ankles, UK, United Kingdom, 29/7/2013 14:13

China is building more coal fired power stations than all of Europe together!

Grasshopper Farmer, Sandburrville, 29/7/2013 10:53

Will you please stop making this stuff up. Everybody knows you can’t read!

Jester
,

Santa Cruz de Tenerife,
29/7/2013 16:48

Its simple: here in France the Greens have cost us 14 billion Euros with their wind farms etc… and they produce 0.5% of our electricity….and those 0.5% are just 500% more expensive to produce than our ordinary means of production. Vote Green if you want your income tax to go up !

Ebee
,

Ramonville, France,
29/7/2013 16:46

While the likes of Huhne who started all this ECO twaddle and Mz Knight whose association with banking leaves little room for belief in anything she says, being part of this public rip off, there’s little wonder hat people are rightly fuming at this tax. I have no problem if a company wants to build a windmill and make money selling the electricity, but to be told by government that we have to subsidise both the building of it and the cost of running it is beyond belief. These people are laughing all the way to the bank, and good old hardworking taxpayers just have to take it. Shameful deceit by these parliamentary wasters.

Smujsmith
,

Pig Atop the Hill, United Kingdom,
29/7/2013 16:26

calling it ‘green tax’ is misleading. it is a fee for releasing pollution into everyone’s atmosphere. it is part of ‘paying your way’ – you pay for the fuel, you pay for disposing of the waste products.

peter whitehead
,

willenhall, United Kingdom,
29/7/2013 16:16

Scrap green taxes or they will add eve more to the anti-establishment vote.

Raven
,

Nottingham, United Kingdom,
29/7/2013 16:13

Nobody’s listening to the electorate. Nobody except UKIP, that is.

Owen Hales
,

Halesowen, United Kingdom,
29/7/2013 16:13

The green tax is just a cash gravy train for those involved in its running and we the public are the ones paying for it until they are rich enough to find another scam for us to pay for.

homer lone
,

skye, United Kingdom,
29/7/2013 16:10

The views expressed in the contents above are those of our users and do not necessarily reflect the views of MailOnline.

Comments are closed.