Green taxes on electricity bills 'will reduce future costs'

Rep. Rishi Sunaka said the fees will help lower energy bills over time by attracting investment in renewable energy. Credit: John Keeble/Getty Images

Getting green taxes back on the bills would cut future energy costs, Downing Street insists amid backlash from Conservative MPs.

Households will have to pay £170 a year on top of their electricity bills when the collection suspension ends in early July.

Decision to fund environmental fees through general taxation rather than consumer bill payments. for two years was announced by Kwasi Kwarteng, then chancellor, in October, but they will again be transferred to consumers.

Rishi Sunak's spokesman backed the decision on Monday, noting the change is coming as Ofgem, the Energy Regulator is cutting the price cap to £2,074 from the current £3,280.

«This means families will see that their electricity bills will be cut by an average of almost £430, the equivalent of a 17 percent reduction,” the spokesperson said.

“This is the lowest level since October 2022. from the outset it was said that the marginal price had fallen below the guaranteed rebate on the energy price. Customers will pay at the regular electricity rate, and this limit includes environmental charges.

“The key point is that charges not only help lower electricity bills over time—they incentivize renewable energy investment— but they also help the population, those who are most affected: so £150 rebate on warm houses, those on pension credit, those on low incomes, so that provides that.”

2505g Price cap falls sharply

But senior Conservative MPs are questioning plans for Number 10, warning that the move comes at the wrong time and could add to high inflation levels.

Sir Jacob Rees-Mogg, a former business secretary, called for an extension Mr. Kwarteng's original plan.

«With high inflation, consumers can't afford green fees that signal virtue,» he told The Telegraph. «Until they are abolished, they should be funded by general taxation, not re-introduced secretly.»

Sir John Redwood, former head of Political Section No. 10 under Margaret Thatcher, said the plan was «of the best inducement, but causes significant economic damage.»

He added: «I don't think we need another green tax on bills at this volatile time when the government's number one priority is to bring down inflation.»

Greg Smith, MP for Buckingham, said fees were «not included», adding: «High inflation is bad enough. The last thing people want is another complicated and opaque surcharge.»

Craig McKinley, a member of the Net Zero research group, made up of Conservative MPs, said: «It looks like pain today for pleasure tomorrow is . The choice of winners is not part of the government's tasks. This is the role of markets and consumers.”

The fees will go towards funding other green schemes, from installing home insulation to contracts with wind farm developers.