David Cameron plans to halve the green levies in energy bills while clearing the way for a windfall tax on suppliers before the next election.
ScottishPower became the latest of the leading energy companies to increase prices yesterday, warning its 2.2 million customers of above-inflation rises that will add £113 to the average dual fuel bill.
Just days after Sir John Major said that millions of people would face a choice between eating and heating this winter, public health officials said that there were “too many avoidable deaths” from the cold, adding further to the pressure for government action.
The Prime Minister, who was accused by Liberal Democrats of a “panicky U-turn” for his surprise announcement on Wednesday that he would “roll back” green taxes, has earmarked four levies on energy companies for abolition. They will be discussed with Liberal Democrat ministers before an announcement in the Autumn Statement on December 4, according to senior Conservatives.
Nick Clegg, the Deputy Prime Minister and Liberal Democrat leader, struck a more conciliatory note yesterday, suggesting that at least one levy — the Warm Homes Discount — could be removed from bills and funded by government revenue. The £135-a-year rebate for poorer pensioners adds £11 to the cost of an average household energy bill.
Another levy, the Energy Companies Obligation, which passes the costs of insulating the homes of poorer consumers to large energy companies, could be amended to reduce the burden on suppliers. Both levies have already been identified by Tory and Liberal Democrat ministers seeking a response to Ed Miliband’s promise to freeze energy bills for 20 months after a Labour victory.
A Conservative source also said that the taxpayer may be asked to meet some of the costs of two subsidies for renewable energy — the renewable obligation and feed-in tariff, which together add around £37 to the average bill — when coalition talks begin in earnest next week.