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23 October 2013

Why a bonfire of the green taxes won’t save the Tories

Polling shows that 75% of the public don't believe that green taxes are to blame for the surge in bills, and they're right.

By George Eaton

The more optimistic among the Conservatives are hailing David Cameron’s surprise pledge at PMQs to “roll back” green taxes as an intervention that could allow them to regain control of the energy debate from Ed Miliband. But even if Cameron can get his plan past the Lib Dems (which appears unlikely), it is doubtful that it will produce the political benefits that the Tories hope.

A recent poll by Survation for the Mail on Sunday found that 75% of the public do not believe that green taxes are to blame for higher bills, and they’re largely right. The recent surge in energy prices owes much more to increased wholesale prices and profiteering by the big six than it does to environmental levies. In addition, of the £112 of “green taxes and green regulations” attacked by Cameron, the majority are energy efficiency measures designed to aid vulnerable households, including the Energy Company Obligation (£50), the Warm Home Discount for pensioners (£11) and smart meters and better billing (£3). Thus, of the average energy bill of £1,276, just £50 (4%) is accounted for by green taxes in the form of the Renewables Obligation (£30), the Carbon Price Floor (£3), the EU Emissions Trading Scheme (£8) and feed in tariffs (£7).

The Tories could transfer the cost of these measures (which are forecast to reduce bills by £166 by 2020) from consumer bills to general taxation, as the SNP has pledged to do, but Labour would simply reply that the government is giving with one hand and taking with one another. Owing to the big six, bills will continue to rise remorselessly. A bonfire of the green taxes lacks the symbolic power of a two-year freeze in prices and will do nothing to convince the public that the government is prepared to side with them against the energy companies. If the Tories want to trump Miliband, they’ll need to go back to the drawing board. 

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