UK considers moving green energy charges from bills to taxation
Britain’s energy secretary, Miatta Fahnbulleh, says the government is examining whether green infrastructure should be funded through general taxation rather than household energy bills. A charity analysis suggests the change could reduce annual bills by about £120, but might require the Treasury to raise or redirect more than £3bn yearly.
The UK government is examining whether the cost of green infrastructure should be transferred from household energy bills to general taxation, Energy Secretary Miatta Fahnbulleh has said. Fahnbulleh said the review would consider how projects such as wind farms, solar panels and home insulation are funded. One option would be to remove some green levies from bills and recover the money through taxation.
An analysis by the MCS Foundation, a green-energy charity, estimated that such a change could reduce household bills by about £120 a year. It also estimated that the Treasury would need to provide slightly more than £3bn annually. The proposal could lower bills but would require either higher taxes or reductions in other areas of public spending.
Fahnbulleh said the central issue was finding a fair way to divide fixed energy-system costs between taxpayers and bill payers. She did not recommit to a previous pledge by her predecessor, Ed Miliband, to cut bills by £300 a year. Fahnbulleh said her measure of success would be whether she could reduce bills, while also maintaining action on climate change.
The discussion comes as ministers seek ways to contain short-term pressure on households. The source material says electricity bills are predicted to rise by more than £400 next year, largely because of the Iran war. Fahnbulleh also defended continued climate action against criticism from Reform and the Conservatives.
She said the government would point to jobs, industries and factories created through the transition and challenged opponents to explain any decision to reverse that progress. Campaigners have long argued that funding the transition through energy bills places an unfair burden on households. They favour spreading costs among taxpayers, with contributions linked to earnings.
No final decision on the funding model was reported.
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