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GWPF calls on Government to suspend £10 billion green levy on suffering households

Press Release, Global Warming Policy Forum

London, 28 January: In the light of growing concern about a sharp rise in fuel poverty among millions of households, the Global Warming Policy Forum (GWPF) is calling on the government to suspend immediately the green levies on energy bills, a cost that is now running at over £10 billion a year, mostly in support subsidies to renewable electricity investors.

This suspension should remain in place for as long as public health measures are needed to tackle the coronavirus, and pending further reforms.

About one third of the government’s climate policy impact hits households directly through their electricity bills, and since it is low-income households that use electric heating they are being disproportionately affected.

The other two thirds of this climate policy cost hits all households indirectly, through general cost of living, as industrial and commercial businesses pass on their additional energy cost to consumers. When a supermarket’s electricity bill goes up because of renewables subsidies the checkout price of a refrigerated pint of milk has to rise too.

This indirect impact is too little appreciated, even by charities concerned with fuel poverty, who are already beginning to express their concerns that the public health measures intended to address coronavirus are deepening problems for low-income households.

Action for Children has said: 

We’re seeing mums and dads home schooling in the cold as they can’t afford to top up the meter, skipping meals to feed their children and asking us for winter clothing and food parcels.” 

End Fuel Poverty has observed that

Fuel bills set to soar under latest work from home rules”, and noted that “working from home could cost some households an extra £45 per month more this winter in increased heating and electricity bills.”

A spokesman for the charity told the BBC that:

Increasing numbers of people right across the country are having to make the stark choice between heating and eating. As temperatures continue to hover around freezing and lockdown restrictions mean people are spending more time at home, so energy bills will soar.” 

Citizens Advice has calculated that a further 600,000 households have fallen into fuel poverty due to previous lockdowns, and a similar or still more serious effect is feared due to the current lockdowns.

GWPF notes that because of the indirect impact on general cost of living the problem is actually much worse than it appears to be, hitting low-income households harder and affecting even middle-income households. Lockdown has exposed the UK’s electricity system as both technically and economically weak, due to over-dependence on renewables.

Grid management costs, already high before coronavirus at £1.5 billion a year, have rocketed during lockdown, as the Electricity System Operator has had to resort to extreme measures to balance the fluctuating wind and solar output during periods of both low and higher demand, and are now expected to be around £2 billion a year.

The full extent of this additional cost has yet to hit consumers, since suppliers have been permitted to defer payment to National Grid. If, as we fear, millions of households are simply unable to pay their bills when these charges are fed through, suppliers large and small may be tipped into financial difficulties, further deepening the crisis.

Dr John Constable, GWPF energy editor, said:

The new team at the Department for Business, Energy and Industrial Strategy, Kwasi Kwarteng and Anne-Marie Trevelyan, face an unenviable choice. If they do nothing, consumer hardship will only get worse. But taking the necessary emergency action in the short run, and adopting a longer-term cost-minimisation strategy will mean admitting that the green policies are failing.”