We’ve been waiting for George Osborne’s autumn statement for some time now in order to confirm what was already hinted at by the Government last week. Energy bills are to be cut by around £50 following a ‘slowing down’ of the ECO policy, alleviating some of the financial pressure on the big six. “Going green does not have to cost the Earth,” he said.
In a previous post we talked about how this may impact our pursuit of a greener society, with renewable energy targets just 7 years away and looking increasingly unattainable. However, Osborne referred to the promise made by the Prime Minister to “roll back” the prices for the average UK household and indicated that the Government intended to keep this promise. While this may offer some short term respite for families and a much needed boost in the polls for the Coalition, they are balancing on a double edged sword. With levies being cut to facilitate the roll back on customer’s bills, many have been asking where green funding is going to resume - someone has to pick up the slack and the green levies need to stay. This much was made clear by the Liberal Democrats and countless local authorities, landlords and academics who petitioned against Mr Cameron’s abandoning of “green crap” as he allegedly referred to it.
Osborne claimed the the funding for the green levies would be made up from additional taxes raised from dealing with issues of tax avoidance. A good idea given that many were speculating it may be recovered from general taxation on the public, something which would not have really solved the issue - only moved it.
As well as this resourcing of green funding, the Chancellor also announced a tax break for shale gas exploration. While bold and risky in light of public campaigning against fracking earlier this year, it is thought this will help drive down energy wholesale prices and secure our energy supplies.
Despite the above measures to try and improve the situation, energy bills are still higher than they were last winter. The big six have added an average of £100 onto each household bill while maintaining profit margins in the region of 5%. Meanwhile, the ECO scheme has been rolled back (design to help poorer households insulate their homes) and the burden of green funding has been taken away from our energy suppliers. Many will be wondering why the energy companies profit margins couldn’t take a small hit, and why the Government seem to be willing to do everything but tackle them head on. The problem with the market is clear - there isn’t enough dilution and the big six have a monopoly hold. Further more, the ones who supply our energy are also in charge of generating it - a recipe bound to turn sour. Surely a reform of the energy market must be on the horizon.