According to the Taxpayers’ Alliance green charges will make up £620 of a typical UK household’s electricity and gas bill by 2020. This would be a result of the government’s continued commitment towards promoting renewable energy.
In stark contrast, Liberum Capital analysts expect green policies to drive costs up 29% by the end of the decade, which would see consumers shelling out an average of £812 for their power. Of these, some £285 would be spent on green taxes and VAT.
Government defends green schemes
The government has stated that consumers will not lose out as green expenditure will be counterbalanced by consumer savings.
The Taxpayers’ Alliance disagrees, and has launched an “Energy Swindle” campaign “urging the government to cut energy taxes that are adding record amounts to family and business energy bills”. It has called for the government to reduce subsidies for sources of energy such as wind turbines.
Green charges are currently added to energy bills in order to fund wind and hydropower projects. They account for around 16% of electricity charges, which is the equivalent to £100 of the average consumer’s £630 bill. VAT currently makes up 11% of gas bills, or £91 of an average £830 statement.
Cutting back green taxes
Matthew Sinclair, chief executive of the Taxpayers’ Alliance, said: “People who are already finding it hard to pay their bills will not be able to cope with the big increases in prices needed to meet draconian targets for the energy sector. We cannot allow more families to suffer needlessly and more jobs to be driven overseas thanks to high prices here in Britain. It is time to stop the energy swindle.”
The Department for Energy and Climate Change (DECC) commented that global gas price rises rather than green subsidies are the main reason behind higher energy bills. The latter accounted for 60% of price increases between 2010 and 2012, and the DECC called for Britain to look to more “home grown alternatives” to protect bill payers from price volatility.