UK Government Refuses to Scrap Green Levies Amid Soaring Energy Prices

By Alexander Zhang
Alexander Zhang
Alexander Zhang
January 5, 2022Updated: January 5, 2022

The UK government has rejected calls from Conservative lawmakers to cut green levies and other taxes to ease the pressure on British households amid soaring energy prices.

Households are expected to see a steep rise in energy costs in April as suppliers are due to increase prices after the cost of gas in wholesale markets rose by more than 500 percent in less than a year.

In a letter published in The Sunday Telegraph, the lawmakers from both the House of Commons and the House of Lords, argued that the cost of the UK government’s climate policy was partly to blame for the rising energy costs.

The letter urged the government to remove the environmental levies on domestic energy, which it said amount to 23 percent of electricity bills, and to cut VAT on energy bills, which will mean a 5 percent reduction in energy prices.

But Downing Street on Tuesday defended the green levies and blamed the energy price rises on “volatile global gas prices.”

Prime Minister Boris Johnson’s official spokesman said, “The exposure to volatile global gas prices underscores the importance of our plan to build a strong, home-grown renewable energy sector to further reduce our reliance on fossil fuels.”

“It’s right that we invest in this and ultimately bring down the cost of renewable energy sources while supporting lower-income and vulnerable households with their energy bills,” he said.

Number 10 also rejected the call to remove VAT from domestic fuel bills, saying it would not necessarily cut costs for consumers.

Speaking at a Downing Street briefing on Tuesday, Boris Johnson said removing VAT is a bit of a “blunt instrument,” as “the difficulty is that you end up also cutting fuel bills for a lot of people who perhaps don’t need the support in quite the direct way that we need to give it.”

He said he appreciates “the difficulties that people are facing because of the increase in gas prices” and is “not ruling out further measures.”

The main opposition Labour Party criticised the prime minister for going back on his promise made during the 2016 Brexit campaign to cut VAT on household energy bills.

Shadow chancellor Rachel Reeves said: “Boris Johnson promised not once but three times to cut VAT on household energy bills during and after the Brexit referendum campaign. Yet now he’s happy to go back on his word, and is trying to muddy the waters on a change that would help ease the burden on households facing soaring energy bills.”

PA Media contributed to this report.