More than 120 organizations spanning energy companies, business groups, charities, and financial institutions have petitioned the chancellor to eliminate levies from energy bills, arguing the charges constitute hidden taxes that inflate costs for consumers and businesses alike.
The signatories, which include Energy UK, the CBI, End Fuel Poverty, and Age UK, are calling for government funding to replace the levies that currently support various energy policies. The letter specifically targets charges funding renewable energy projects, nuclear power construction, the warm homes discount scheme, and the feed-in tariff programme, which ceased accepting new applications in 2019 but continues compensating existing contract holders. According to the organizations, shifting these costs off bills could reduce average household expenses by as much as £250 annually and lower business electricity prices by 20%.
The request comes as UK energy costs remain among the highest in developed nations. A recent energy forecast suggests bills may reach £1,872 for the average household, with further increases anticipated. Energy analysts have warned that bills could rise 20% over the coming years despite potential drops in wholesale prices, driven by increasing policy-related levies. Recent geopolitical tensions have also contributed to upward pressure on gas and electricity prices, with households facing their highest energy bills in three years heading into winter.
The government faces mounting pressure following its previous commitment to reduce energy bills by £300 annually by 2030. While a VAT reduction on domestic energy bills was implemented in October at an average savings of £45, this measure is currently scheduled to expire in April. Energy industry leaders contend that removing levies from bills would demonstrate government commitment to addressing fuel poverty, stimulating economic growth, and controlling inflation, while preventing further business closures and job losses across the economy.
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