UK chancellor urged by 120 groups to remove green levies from energy bills
A coalition of more than 120 organisations has petitioned the UK government to remove policy levies from utility accounts to ease cost-of-living pressures.
A broad coalition of more than 120 organisations has formally petitioned the UK government to strip policy levies from domestic and commercial utility accounts. Signatories, which include major businesses, charities, and industry groups such as Energy UK, the Confederation of British Industry (CBI), Age UK, End Fuel Poverty, the British Retail Consortium, and Which?, argue that these charges inflate utility expenses and penalise the transition to clean power. The coalition contends that shifting legacy costs onto general taxation would lower household bills and relieve severe pressure on industry as energy costs sit significantly higher than in past years.
The coalition's letter highlights that levies funding renewable energy projects, nuclear developments, the warm homes discount, and legacy feed-in tariffs amount to roughly 10% of typical utility costs. Signatories want the remaining green scheme levies scrapped from bills entirely, mirroring previous restructuring efforts where a portion of funding was shifted to central government taxation. According to reporting, previous measures saw a restructure of how certain green and social schemes are funded, removing several policy costs from energy bills in a move estimated to have cut household costs by between £130 and £150 a year.
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Ed Matthew, director of the UK programme at E3G, stated that the country was actively hindering its own economic goals by taxing electricity.
"The UK is actively sabotaging its own efforts to bring down energy costs by taxing electricity. Any credible plan to tackle the cost of living and enable reindustrialisation needs to include removing these taxes from bills to the exchequer."
Ed Matthew, director of UK programme at thinktank E3G
Dhara Vyas, chief executive of Energy UK, added that cheaper electricity would have an outsized impact across the economy.
"High electricity prices hurt all of us. By taking levies off the bill, the government can show it is serious about tackling fuel poverty and the cost-of-living crisis, growing the economy, and bringing down inflation. Cheaper electricity would have an outsized impact across the economy."
Dhara Vyas, chief executive of Energy UK
| Proposed Intervention | Estimated Impact | Target Group |
|---|---|---|
| Removal of remaining green and social levies | Up to £250 annual saving per household | Domestic consumers |
| Exchequer funding for electricity levies | Up to 20% price reduction | Businesses and industry |
| VAT reduction on domestic electricity | Average saving of £45 | Households |
The push to overhaul utility taxation comes as households and businesses grapple with elevated expenses. Geopolitical tensions, including the conflict involving Iran, have driven up wholesale gas and electricity prices, pushing bills to multi-year highs and prompting regulatory price cap increases. Business groups warn that high overheads are driving company closures, job losses, and deterring investment across the business sector. Meanwhile, household energy debt has approached £7 billion, and more than four in ten British businesses have cut investment according to campaign warnings.
To provide broader context on household financial pressures, consumer champion Martin Lewis recently urged customers to audit their utility accounts for excess credit balances. Writing on MoneySavingExpert (MSE.com) and discussing the issue on this week's episode of The Martin Lewis Money Show on ITV, the consumer champion said May is the key point in the energy billing cycle when customers should have little credit left on their accounts after higher winter energy use.
Political debate persists over how to fund wider cost-of-living support and green transitions. While past measures such as VAT cuts and targeted levy overhauls have provided temporary relief, further policy adjustments are under consideration. Critics of past treasury actions, including decisions around North Sea energy taxation highlighted by the BBC, demonstrate the delicate balance ministers must strike between raising public revenue and protecting vital domestic industries.
What happens next depends heavily on upcoming fiscal statements and regulatory announcements. Observers are awaiting further details from the treasury regarding potential structural tax reforms, alongside forthcoming utility price cap adjustments from Ofgem that will dictate winter energy costs for millions of consumers.
