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David Cameron Places Green Energy Subsidies Under Review, LibDems Say Nothing Will Change

Elizabeth Rigby and Jim Pickard, Financial Times

David Cameron has put the government’s green energy subsidies under review, setting the coalition parties on a collision course as the prime minister scrambles to find ways of cutting energy bills in the face of Labour’s promised price freeze.

The prime minister’s spokesman confirmed on Friday that the government’s £1.3bn Energy Companies Obligation subsidy was among a series of policies under review as the coalition looks to ease pressure on family budgets.

Energy bills are back in the spotlight this week after SSE announced an 8.2 per cent rise in energy bills on Thursday.

“In the context where people’s budgets are squeezed they would expect us to look across the range of what can be done,” said the prime minister’s spokesman when asked whether the ECO programme was under review. “That is what the government will be doing.”

The Financial Times revealed on Monday that officials and ministers are examining at least three programmes with a view to reining back costs: the ECO, the carbon floor price and renewable obligation certificates.

Downing Street’s determination to water down some green policies as part of efforts to keep power bills from rising further is a political flashpoint within the coalition, with the Liberal Democrats adamant that green subsidies must stay in place.