Personal Account

Is it time to ‘cut the green crap’ again to lower energy bills? No – there is a better way

In 2013, the then prime minister David Cameron declared the Government should “cut the green crap”. However, that bold decision, which ended subsidies and cut energy efficiency funding, now costs each household in England £150 more a year, according to research by Carbon Brief, a climate science website. As energy bills soar – and as the price cap is forecast to hit £2,800 in October – MPs are desperately looking for ways to help.

The situation is dire. The number of distressed callers ringing energy providers is rising sharply. Keith Anderson, chief executive of Scottish Power, this week told MPs that customers were expressing “a huge amount of anxiety”.

Michael Lewis, his counterpart at E.On, warned that four in 10 of us would end up in fuel poverty by the end of the year. The situation requires “unprecedented action from the Government”, he said. So far it has not done much. Council tax rebates – designed to take the sting out of rising costs – will barely make a dent and don’t help everyone. A £ 200 refund on energy bills this autumn is a loan that will be paid back from next year. Meanwhile, analysts at Cornwall Insight said energy prices would remain high for a decade.

Some Tory MPs have been pushing the Government to “cut the green crap” again and get rid of the green levy tacked on to every household’s energy bill. Coincidentally, doing so would save £153 a year – a mirror image of the cost of Mr Cameron’s initial bright idea. Doing so would be shortsighted. Carbon Brief ’s take was that Mr Cameron’s cuts left households exposed to soaring global gas prices, which pushed up bills. His policies, and those of every occupant of No 10 this century, are to blame for our predicament. Slashing the green levy would be a false economy, experts say, and would instead keep Britain dependent on gas for longer.

There is a better option. Ministers and energy firms should get rid of the standing charge, a fixed daily amount that all households pay no matter how much energy they use. It is not linked to wholesale gas or electricity prices and is supposed to pay for infrastructure. However, it was raised in April to cover the cost of moving customers from the 31 failed energy firms. Depending on how you pay, it has nearly doubled to £320 a year.

It is a tax simply for being connecting to the grid and it is unfair as a small oneperson flat pays the same as a family of four in a detached property.

It means energy bills have shot up before a light has been switched on. OK, the price of energy has gone up but the method of delivery is the same – so why should it rise so sharply? Energy firms are getting billions of pounds more from this unfair increase, worsening the crisis for their customers. It needn’t be so high.

David Osman, a former senior economist at Ofgem, the regulator, said the charge should be only £60 per year.

This year’s standing charge all but wipes out any benefit of the Chancellor’s pitiful handouts.

We face two simultaneous emergencies: a long-term climate crisis and a shorter sharp energy shock. There is a way to help now, while not cutting the green crap, too.

E.On’s boss said the situation required ‘unprecedented action from the Government’