In 2013, then-prime minister David Cameron declared that the Government should “cut the green crap”. That decision, of ending subsidies and cutting energy efficiency funding, now costs each household in England £150 a year, according to research by Carbon Brief.
As energy bills soar – with the price cap forecast to hit around £2,800 in October – the Government is now desperately looking at ways to act.
The situation is dire, and will only get worse later in the year. The number of distressed callers ringing up their energy providers is rising sharply. Keith Anderson, chief executive of ScottishPower, this week told MPs that customers were expressing “a huge amount of anxiety”. Michael Lewis, chief executive of Eon, warned that 30pc to 40pc of people will end up in fuel poverty by the end of the year. The situation requires “unprecedented action from the government”, he said.
So far it has not done much. Council tax rebates designed to help take the sting out of energy bills will barely make a dent, and a proportion of the money is actually a loan that will have to be paid back from 2023. Meanwhile, analysts at Cornwall Insight have forecast that energy bills will remain high for the next decade.
So is it time to cut the green crap again? Some Tory MPs have been pushing the Government to get rid of the green levy which is tacked on to every home’s energy bill. Coincidentally, doing so would save each household £153 – a mirror image of the current cost of Mr Cameron’s cuts.
But doing so would be shortsighted. Carbon Brief’s argument was that Mr Cameron’s cuts left households highly exposed to soaring global gas prices, therefore pushing up bills. His policies – and indeed every occupant of Number 10 in recent memory – are to blame for Britain’s current energy crisis. Experts argue that slashing the green levy would be a false economy, instead keeping Britain dependent on gas for longer.
Instead, there is a better option. It should get rid of the standing charge, the fixed daily amount that all households pay no matter how much energy they use. It is not linked to wholesale gas and electricity prices but pays for infrastructure. It was raised in April to cover the cost of failed energy firms, in some cases almost doubling to £320, depending on how you pay.
It is a tax simply on being connecting to the grid, and is unfair to consumers. It means people’s energy bills have shot up before they have even switched a light on. While the price of energy has gone up, the method of delivery is the same – so why should it rise so sharply? Electricity standing charges have almost doubled since January 2019.
Billions are being unfairly raised this way, worsening the energy crisis, and enriching energy suppliers. And it needn’t be so high. David Osman, a former senior economist at Ofgem, has said the charge should only be £60 per year. This year’s increase has all but wiped out any benefit of the Chancellor’s pitiful handouts.
We face two simultaneous emergencies: a long-term climate crisis and a shorter sharp energy shock. There is a way to help now, while not cutting the green crap, too.