Government accused of Orwellian misinformation over claims 'green levies will bring down energy costs’

London, 28 June - Net Zero Watch has accused 10 Downing Street of Orwellian-style misinformation over its absurd claim that shifting green levies back onto energy bills “will help bring down energy bills over time."

As reported by the Sunday Telegraph, the government is silently reapplying the cost of green levies to domestic consumer energy bills, reversing the decision taken under the Truss government to fund these costs from general taxation.

In light of the cost of living and energy cost crisis it is obviously preferable that these levies should be funded from progressive taxation rather than drawn from consumer energy bills, where the effects are sharply regressive, hitting poor and low-income households the most.

The statement by the Prime Minister’s official spokesman in defence of this decision suggest that Rishi Sunak has either been misled by his advisers or they have failed to understand green levies and their full impact on cost of living.

Mr Sunak’s spokesman has been quoted in the press (Daily Telegraph 27 June), claiming that:

“The crucial point is that the levies not only help bring down energy bills over time – they drive investment in renewables – but they also help the public, those hardest hit: so the £150 in the warm homes discount, those on pension credit, those on low income, so that’s providing that.”

The Prime Minister’s spokesman appears to be confused about the character and scale of the £150 Warm Homes Discount on the electricity bills of low-income households. This is a cross-subsidy funded by levies on the bills of other consumers, but it is not a green levy in the strict sense, and is no longer included amongst the Environmental Levies as listed by the OBR.

In any case, the Warm Homes Discount amounts to only about £475m a year in total and is awarded to only around 2 to 3 million households, a benefit which pales into insignificance besides the scale of green levies proper: the Renewables Obligation, the Contracts for Difference, the Feed-in Tariff, the Capacity Market and the Green Gas levy.

Together, these levies cost consumers approximately £8.5 billion a year, and affect all 26 million households, both through their electricity bills and through general cost of living, as industrial and commercial consumers pass on their share of these costs in the prices of goods and services, a total impact of over £300 per household.

On top of this there is the UK Emissions Trading Scheme, currently adding about £6 billion a year to the costs of doing business in the UK, depressing wages and rates of employment and adding yet another layer of indirect green taxation to the cost of living.

Unless the Prime Minister abandons his plan to punish low-and middle-income households with ever higher energy costs, he risks a public backlash at the ballot box.

Dr John Constable, NZW’s energy director said:

“The Government’s decision to silently reapply green levy costs to bills is in itself a retrograde step and a mistake, but the misinformation in defence of this decision suggests a negligent lack of engagement with the reality of their own climate policies. Carelessness of this kind is crying out for punishment at the ballot box.”

Further information
Does the Government understand its own green levies?

Contact

Dr John Constable
Energy Director, Net Zero Watch
e: john.constable.1837@gmail.com

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