The UK Government has been accused of being “reckless and wasteful” in spending consumers’ money on green energy and climate subsidies.
Think tank Policy Exchange is calling on policymakers to prioritise affordability “as they have for too long, failed to strike the right balance between energy affordability and decarbonising the economy”.
Its new report argues that while energy companies have been blamed for not doing more to lower bills for consumers, the government is “as much to blame”.
Energy bills
It claims the government has control as its energy and climate policies make up 7% of the average household bill, network costs, i.e. transporting energy to end users, account for 22% and VAT another 5%.
In total, the government controls 34% of the energy bill for the average household and 47% for medium-sized businesses, it adds.
The think tank said the average household energy bill has risen by £120 in the last five years to around £1,340 “due to ill thought through energy and climate policies”.
It claims gas prices increased by 185% in the decade to 2014 – faster than all other household goods and services – and electricity prices by 120%.
Recommendations
Some of the report’s recommendations include creating a “clearer voice” for consumers in energy policymaking, scrapping the 2020 renewable target, revamping the Green Deal and focusing on decarbonisation efforts on mature, low cost generation technologies.
The group also said subsidies paid to households for small-scale renewable projects were “excessive and should be cut significantly to stem the increase in policy costs”.
It is urging the government to create a package of policies that is “more coherent and sustainable”.
Richard Howard, author of the report, said: “Household energy bills have soared in recent years. This is not, as some have suggested, due to rip off energy companies but in fact in large part due to government policy.
“Government should take its decarbonisation commitments extremely seriously but must also recognise what consumers really want is affordable energy. That is why we are proposing that there should be stronger consumer oversight over policy decisions and that government should look at ways to meet energy and climate objectives at lower cost to consumers.”
The government insisted reducing energy bills for consumers is its “priority”.
A DECC spokesperson added: “We’ve already announced reforms to remove subsidies for onshore wind and that work to make sure bill payers are getting the best possible deal is going to continue.”
Last week Chancellor George Osborne’s Summer Budget confirmed the Climate Change Levy exemption for renewable electricity will be scrapped.
