Figures published earlier this month by the Taxpayers’ Alliance alleged that household energy bills could increase to £2,000 on average.
Energy Secretary Ed Davey has contested the findings and told the Independent: “Energy bills are too serious an issue for consumers to be misled with dodgy, back-of-fag-packet claims.”
‘Your calculations are wrong’
Davey wrote a letter to the low-tax pressure group in which he stated that the figures were incorrect: “Your calculations are wrong and there is no good foundation to your claim that by 2020 green charges and tax will account for £620 of average energy bills. It is disingenuous to seek to pin the blame on government policies using inflated assessments of their impacts while ignoring the main driver for price increases – rising global fossil fuel prices.”
He also criticized the methodology employed by investment bank Liberum Capital which carried out the initial research: “[Liberum Capital] does not appear to have undertaken the detailed modelling of the electricity market required accurately to estimate the impact on prices and bills.”
A difference in opinion
The Taxpayers’ Alliance’s chief executive Matthew Sinclair said: “The Liberum estimate of the investment needed seems very reasonable, particularly given the problems facing the nuclear programme and the Government missing their target to reduce the cost of offshore wind. It is very worrying that the Government is premising its policies on rising gas prices.”
The original analysis was carried out by investment bank Liberum Capital which estimated that green taxes would see electricity bills reach £812 by 2020. Based on these findings the Taxpayers’ Alliance claimed gas prices were in line to rise by 29% and launched the “Energy Swindle” campaign, which demands an end to wind farm subsidiaries.
Green taxes currently make up roughly 16% of electricity bills and VAT represents 11% of gas bills.