MPs call for ‘green energy levies’ to be moved to UK income tax

Sir Robert Smith, MP
Sir Robert Smith, MP

MPs on Westminster’s Energy and Climate Change Committee have called on the UK government to move ‘green levies’ to general taxation.

Sir Robert Smith, MP, Chairman of the Energy Committee has written to the Prime Minister, urging him to take this action because the Energy Company Obligation (ECO) ‘hits hardest those people who are least able to pay’.

Sir Robert said in his open letter: “Improving the energy efficiency of Britain’s housing stock is crucial to insulate us from rising energy prices and support those on low-incomes struggling to heat their homes.

However, the increasing use of levies on bills to fund energy efficiency policies like the Energy Company Obligation (ECO) is problematic since it is likely to hit hardest those least able to pay.

 

“We have previously noted that public funding is less regressive than levies in this respect. Therefore, will you consider moving these sources of funding to general taxation?”

The Energy committee also warned the prime minister about the importance of maintaining investor confidence to invest in critical energy generation and transmission infrastructure.

Sir Robert added; “If the Government is to unlock the £110 billion of investment needed for new electricity generation and transmission infrastructure by 2020 industry confidence is vital.

“The feed in tariff with Contract for Difference (FiT CfD) designed to support investment in low-carbon generation is the cornerstone of the Energy Bill currently making its way through Parliament.

“Backtracking on these legally-binding contracts will damage policy credibility, seriously undermine investor confidence and could increase the cost of capital for new energy investments – thus pushing up energy bills.”

The Renewable Energy Association (REA) – the largest such trade association in the UK, with 1,000 energy producers – welcomed the letter from Sir Robert.

Paul Thompson, REA Head of Policy, commented: “Home-grown renewable energy and home-insulating energy efficiency are the two key ingredients to stable, affordable energy for the long-term. They shield us from the risks of ever increasing fossil fuel prices and they preserve a safe environment for the future.

“The question of how public investment is raised is a fair one though, and we are open to new suggestions, provided they do not undermine jobs and investment.

“With a capacity crunch looming from 2015, the Government cannot afford any further delay to the construction of new low carbon generation, such as biomass, solar, waste and wind energy.”

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