With the new Ofgem price cap coming into effect earlier this month, UK households are facing the pressures of the energy crisis more than ever. From April 1, the price cap was raised by 54 percent, pushing household energy bills to a cap of £1,971 a year. In light of this crisis, the Chancellor may consider scrapping the £153 green energy levy on electricity bills, which helps fund renewable energy subsidy schemes.
According to the Telegraph, the Government is looking to phase the tax out by Autumn, when household bills are expected to soar further.
A source said that Government officials understood the general dislike that backbench Tory MPs have about the levy, and consider scrapping the tax as an “attractive option”.
Conservative MPs have demanded that Mr Sunak scrap the green levies to help ease the cost of living crisis.
This, along with a number of other green taxes, make up nearly a quarter (23 percent) of the cost of household electricity.
They help partly fund investment in renewables along with paying energy companies to subsidise energy-efficiency improvement in poorer households.
Robert Halfon, a senior Tory MP and select committee chairman who has campaigned on the cost of living, described the levy a “millstone around people’s necks”.
“It would really be welcome if the Government could do something further on the cost of living.
“That is the thing that is most worrying the public, more than the parties.
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“You can’t balance environmentalism on the backs of working people.”
According to the Office for Budget Responsibility, an analysis of wholesale oil and gas prices suggests that household bills could further increase by another 40 percent when Ofgem reviews the price cap later this year.
This suggested price cap increase, combined with the one earlier this month, means that the amount that people are paying for in their electricity bills will have doubled in less than a year, rising to £2,800 for customers on default tariffs.
Last month in his Spring Statement, the Chancellor announced a £300 worth of support per household to help with an expected energy bills spike later this year, however, he refused to cut green levies.
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Previously, he had also announced support for households which included a £150 council tax rebate and a £200 repayable energy bill discount.
Despite these measures, Mr Sunak was criticised by Tory MPs who argued that these actions did not do enough to ease the effects of the crisis.
A Downing Street source told the Telegraph that nothing has been ruled out, adding that the Government would not drop any of the green energy levies before autumn, when it would be “one of several options”.
They said: “We are a long way out from autumn and we wouldn’t rule anything out.
“Certain of our MPs really like it, we understand it’s an attractive option that some are pushing.”