Ministers are to “stress test” green measures that have contributed to rising fuel bills, as British Gas added to the political controversy over rising energy prices with an average 9.2 per cent increase from next month.
Nick Clegg, deputy prime minister, said ministers would look at all measures imposed on fuel bills by the government to make sure they bolstered infrastructure investment and insulation and tackled fuel poverty in a cost-effective way.
But David Cameron’s “quad” of senior ministers – including Mr Clegg, George Osborne, chancellor, and Danny Alexander, Treasury chief secretary – concluded last week that stopping spiralling energy prices had no easy solutions.
Mr Osborne has dismissed removing the so-called carbon price floor – which raises more than £1bn a year for the Treasury – from customers’ bills on the grounds that it is not a top priority for the cash-strapped exchequer.
The chancellor argued that the coalition should not fight Ed Miliband on “his chosen territory” by trying to match the Labour leader on his promise to freeze energy bills for 20 months after the next election.
Mr Osborne and Mr Clegg believe that the coalition should instead ensure that government-imposed levies on fuel bills were “value for money” and use competition to reduce the scale of any bill increases.