Labour have brought forward an Opposition Debate this morning on the subject of Value Added Tax on household energy bills, where they will call for the government to remove VAT on energy in the face of rising bills – incidentally, something only legally possible because of Brexit. This is quite some U-turn.
According to research from the Taxpayers’ Alliance, the Climate Change Levy (2001) and Renewables Obligation (2002) took £14.5 billion out of bill payers’ pockets under the Labour government. Ed Miliband was the last Labour Energy and Climate Change Secretary. The Tories have continued the trend, by upping the tax take on energy bills with green levies set to hit over £18 billion a year. These new taxes were introduced and by Labour…
As Energy Secretary, Miliband justified the added costs to business by saying we should sacrifice economic growth to cut emissions:
“We can either lose three months or six months of economic growth, for the world, and act, or we face this huge risk in relation to the cost of adapting to climate change”.
Between 1997 and 2010, the average domestic gas bill went up by 105%, from £275 to £564, and the average electricity bill went up 47%, from £323 to £474. (Source DECC, Quarterly energy prices, table 2.2.1, December 2014).
The TaxPayers’ Alliance’s James Roberts says:
“It seems eco-preaching politicians are finally wising up to the fact that higher green taxes mean higher energy bills. Now they’ve got until April to do something about it, before taxpayers are hammered by rising bills and other tax hikes.”
Labour may have finally seen the light on energy taxes. Has the government?
Alok Sharma hosted a pre-COP26 summit in London last week where he was attempting to shape the agenda and outcome of the event. India, which due to industrialisation in recent decades has raised the living standards of hundreds of millions of her citizens, made excuses for not attending. Continental Africa, which sent only a handful of countries, repeated demands for rich industrialised countries to transfers billions annually to fund green growth. This comes after Britain cut back billions from foreign aid this year, putting Sharma in a difficult position.
South African Environment Minister Barbara Creecy demanded countries at November’s UN COP26 climate talks in Glasgow should set a target of mobilising $750 billion-a-year from industrialised countries to help poorer nations transition to greener energy. Her goal is significantly higher than the $100 billion-a-year that was set for 2020, which rich countries have so far failed to deliver on. In negotiations leading up to COP26, a compromise is supposedly emerging to push the date to 2025. Which rich democratic countries will once again fail to deliver on.
The truth is that there will not be, whatever is promised in November, a $750 billion-a-year transfer of capital from the billion or so taxpayers in the industrialised world to the government elites in the developing world. No democratic country has a mandate to “tax and send” at that level – nor will they ever. India is not going to change direction on the dash for industrialisation powered by coal, which has powered great rival China’s rapid industrialisation. India knows that vastly more people die as a consequence of poverty and disease each year than die as a consequence of global warming. As in the past, we humans are capable of adapting to climate change in ways that can significantly mitigate its adverse effects, without choking off economic growth. A massive reduction in fossil fuels would exacerbate global poverty, cost-benefit analyses of climate policies reveal that there are better ways to alleviate human misery than spending taxpayer subsidies on panic-driven, political non-solutions to a changing climate. We need to develop more clean, green technology to save the planet and lift people out of poverty.
Families will have to fork out £400 more a year on bills to cover the cost of net zero, according to the government infrastructure advisor. The recommendation will likely intensify opposition to Boris Johnson’s net-zero pledge from backbenchers…
Analysis suggests this cost will be not be distributed evenly and by 2050 it is expected that the poorest tenth of households will pay an extra £80 a year, and the richest tenth will pay an additional £400 a year. These figures are a conservative estimate…
The Taxpayers’ Alliance’s John O’Connell has slammed the policy arguing that:
“The net zero target must not see working taxpayers landed with the bill. With the highest tax levels in 70 years, family finances are already strained and they cannot be expected to pay more for food, goods and travel. Ministers must promise to protect Brits from any green cost hikes.”
Net Zero and levelling up seem incompatible if it just translates into higher taxes….
The idea for green number plates from Grant Shapps is straight out of nudge theory:
How can we best encourage zero-emission vehicles? Green number plates could help…
✅ highlight electric vehicles
✅ raise awareness
✅ promote clean energy
— Dept for Transport (@transportgovuk) October 22, 2019
This is at the sensible end of green policymaking: it doesn’t cost much, encourages rather than coerces, and will allow people to virtue signal over paying top money for a car that can’t get them to the shops and back… yet.
The Guardian’s political correspondent Peter Walker, however, reckons “giving electric vehicle drivers free parking just perpetuates yet another problem, inequality.” It does seem paradoxically iniquitous to give the richer owners of the most expensive cars lower taxes and driving costs…
UPDATE: It turns out this is a re-announcement of the scheme Chris Grayling unveiled in September of last year. Unlike
Michael Green Grant Shapps to simply rename and relaunch something like this…
Reminds Guido of Shapps’ suspiciously similar speech to Chris Grayling over airline collapse. Is this a DfT that is a little too keen on recycling?..
Green subsidies – levied on consumer bills – will treble by 2021-22, The Office for Budget Responsibility says. The controversial tax take will rise from £4.6 billion in 2015-16 to £13.5 billion in 2021-22. The cash will be spent on subsidising economically non-viable energy, such as solar and wind farms. Earlier this week Centrica, the parent company of British Gas, got into a public spat with the government, blaming green levies for putting an extra £149 a year on household bills. The firm said green taxes caused “significant pressures” on pricing and that there was no option but to pass costs on to customers. Centrica CEO Ian Conn said:
“It is transmission and distribution of electricity to the home and government policy costs that are driving our price increase.”
A spinner for the Department for Business, Energy and Industrial Strategy (BEIS) claimed: “A number of independent reports have shown energy policy costs make up a relatively small proportion of household energy bills.”
Days later the government’s own forecaster admits green policy costs will treble…
Dave is in Lanzarote, Sajid Javid is on an ill-timed jolly Down Under and Jeremy Corbyn wants parliament recalled to debate the dying British steel industry. While cheaper Chinese imports may have forced prices down, British steel prices have risen £30 per tonne since Christmas, with EU prices nearly £50 higher than Chinese in November. The EU’s 37 failed anti-dumping measures are just a sideshow to the real problem facing the industry: excessive EU green taxes and carbon caps.
By pledging to cut carbon emissions by “at least 40%” in 2030, Brussels has forced energy companies into a spate of investments and divestments, causing chaos within the industry and sending electricity prices into the stratosphere. In the fracking-friendly USA, electricity costs just 7 pence per kilowatt hour – down 2% from last year. In China the cost of coal power has fallen by 2 pence. In Britain the average price per kilowatt hour for electricity last year was 13.9 pence – over 50% higher. As Kate Hoey says:
“The EU’s regulations on energy production are killing our steel industry. It is impossible for the UK to compete with non-EU countries like the US, where electricity costs half the price, and Norway, where energy is 25 per cent of the UK price. They unlike us are free from dogmatic, ineffective rules on energy sources.”
Even if Osborne wants to intervene, his hands are tied in any bailout situation by strict EU government aid laws. The UK had to grovel to EU bureaucrats for permission to off-set the new higher energy costs for the steel industry. Labour voters and Remain-backing unions like the GMB should face facts – the EU won’t save their members and will stop the government from doing so…