Chancellor urged to remove ‘hidden taxes’ from energy bills
More than 120 organisations, including Energy UK, the CBI, End Fuel Poverty and Age UK, have written to the chancellor urging him to remove "hidden taxes" from energy bills, arguing this would ease the cost-of-living crisis and stop businesses closing. The letter calls for levies that fund government policies, currently making up around 10% of bills, to be paid for by the Treasury instead of consumers, ahead of John Healey's first budget on 28 October.
The signatories want funding for renewable energy projects, nuclear power plants, the warm homes discount scheme and the feed-in tariff programme moved off bills entirely, saying this could cut average household bills by up to £250 a year and reduce business electricity prices by 20%. The letter notes UK energy bills are 70% higher than in 2021, with Cornwall Insight forecasting a further price cap rise to £1,872 annually in January amid pressure from the Iran war on wholesale prices. It follows Rachel Reeves's move last year to shift 75% of levy funding onto general taxation, and comes as the government faces scrutiny over its pledge to cut bills by £300 by 2030.
In short
- 120+ groups urge chancellor to scrap "hidden" energy levies before October budget
- Move could cut household bills by up to £250 a year, letter claims
- UK bills now 70% higher than 2021, with further price rises forecast
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Moving policy levies from energy bills to general taxation could ease pressure on households and businesses, especially when energy costs are already high. Supporters argue that funding renewables, nuclear power and help for low-income households through the wider tax base would spread costs more fairly and give firms relief from high electricity prices.
The case against
Keeping some policy costs on energy bills makes the link between energy use and its costs more visible, and avoids shifting the full burden to taxpayers generally. Critics could argue that moving levies to the Treasury may mean higher taxes or less funding for other priorities, while broad bill cuts may offer less targeted help than support directed at households most in need.
Explained simply
Energy bills include the cost of supplying gas and electricity, as well as charges that fund government schemes. These charges, known as levies, support programmes such as renewable energy projects and discounts for some households.
More than 120 organisations, including energy businesses, employers’ groups and charities, are calling for the Treasury to pay these costs from general taxes instead of adding them to bills. They argue this could reduce costs for households and businesses; the change would affect how the schemes are funded and who pays for them.