Green energy taxes to treble in five years

THE cost of green taxes on energy bills will nearly treble over the next five years, the official economic forecaster has said.

The Office for Budget Responsibility said the cost of the subsidies, which are levied on household and business energy bills, is expected to rise from £4.6billion in 2015-16 to £13.5billion in 2021-22. It comes after British Gas claimed that green taxes would cost households £150 from next year as it blamed the Government for a huge rise in electricity bills.

British Gas forecast that the cost of the subsidies, used to fund renewable sources of energy such as wind and solar, will hit £149 next year, having risen by two-thirds since 2014. It announced that three million of its customers on a dual fuel standard variable tariff would see annual bills rise by £76 on average to £1,120. It will add to mounting tensions in the Conservative Party over the push for renewable energy.

Michael Gove, the Environment Secretary, has signalled that more wind farms may need to be built to power a new generation of electric cars under government plans to ban the sale of diesel and petrol vehicles. However, some Tory MPS have warned that the taxes are “regressive” and will penalise those who can least afford it.

It comes after Theresa May was forced to water down plans to cap energy bills in the wake of the Conservatives’ poor general election results.

Before the election, Mrs May pledged to cap expensive standard variable tariffs – delivering a saving of up to £100 a year for 17million households. But the pledge appears to have been abandoned, with the regulator Ofgem instead being asked to come up with protection for “vulnerable” customers.

The Government insists, however, that the pledge is “in no way off the table” and that it is “ruling nothing out”.

British Gas said that the cost of green subsidies levied on bills had created “significant pressures” and suggested that it had no choice but to raise prices.

Ministers last night hit back and suggested that price rises were unjustified. Government sources highlighted the fact that British Gas is also axing a £15 dual fuel discount currently enjoyed by 3.1 million customers from September.