Reports say Chancellor Rachel Reeves is looking at ways to cut energy bills to ease the cost of living crisis
Chancellor Rachel Reeves is considering slashing green levies to help fund a cut in energy bills for households, it has been claimed.
Reports say the Chancellor is considering a package of measures to save the average household about £170 a year. There has already been speculation she could axe the 5% VAT on energy bills, knocking around £90 off bills.
But it is claimed she is looking to go further and remove funding for certain energy efficiency measures too. It comes as Ms Reeves vowed to make “improving the cost of living” a key part of this week’s pre-Budget speech.
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Government environmental schemes take up a chunk of the £1,755 a year average energy bill. Of that, £89 is for renewable obligations, and £43 for the energy company obligation.
Together with other policy measures – including the Warm Home Discount – they amount to £215 of the typical annual bill. Energy regulator Ofgem is due to announce the level of price cap for millions of households from January 1 on November 21 – less than a week before the Budget.
Industry experts Cornwall Insight has forecast it will dip, but only slightly, to an average £1,725 a year. A Treasury spokesperson said: “We do not comment on speculation around future changes to tax policy outside of fiscal events.”
Gillian Cooper, director of energy at Citizens Advice said: “When the government came into power it promised to make homes more energy efficient – through measures like insulation – and give people access to money-saving options like solar panels.
“Rowing back on this manifesto promise would not only be disappointing, but would risk trapping people in a cycle of paying over the odds to heat cold, draughty homes.”
Greenpeace UK’s policy director, Dr Doug Parr, said: “These levies should not be cut, but paid for through tax, so those with the broadest shoulders pay a fairer share.”
The Treasury pointed to existing help, including the extension of the Warm Homes Discount to an additional 2.7m households, and £1.8billion of funding to help upgrade the energy efficiency of as many as 170,000 low-income homes.
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