A coalition of more than 120 organizations spanning energy companies, business groups, charities and financial institutions has submitted a letter to the chancellor calling for the removal of levies embedded in energy bills. The signatories, which include Energy UK, the CBI, End Fuel Poverty and Age UK, argue that these charges represent approximately 10% of consumer energy bills and should instead be funded through government taxation.
The organizations contend that relocating these levies off energy bills could reduce the average household bill by as much as £250 annually, building on savings of £150 already achieved through previous government action to cut some green energy levies. For businesses, the groups suggest electricity prices could decline by 20% if the levies were removed. The letter also calls for the elimination of specific levies funding nuclear power plant construction, the warm homes discount scheme, and the feed-in tariff programme, which ceased accepting new entrants in 2019 but continues to compensate existing participants for renewable energy generation.
Energy costs in the UK have become a significant economic concern, with bills reportedly 70% higher than levels in 2021. Recent forecasts suggest further increases are likely, with the energy regulator expected to raise its quarterly price cap again in January. The current average annual bill stands at approximately £1,872, with price pressures partly attributed to geopolitical tensions affecting commodity markets.
The government has faced mounting pressure to address energy affordability following a pre-election commitment in 2024 to reduce bills by £300 annually by 2030. A modest VAT reduction on domestic energy bills was implemented in July, providing an average saving of £45, though this measure is currently scheduled to expire in April. Organizations backing the letter emphasize that high energy costs contribute to business closures, job losses and reduced investment while simultaneously impacting inflation and economic growth.
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