Will cutting the “Green Levy” lower energy rates? and will it benefit small businesses ?

by | Jan 18, 2022

Will cutting the “Green Levy” lower energy rates? and will it benefit small businesses ?

A green levy on energy bills covering the cost of insulation for the poorest households could be cut to reduce the burden UK households are facing from ultra-high gas prices.

According to the Times, the treasury is reviewing the energy company obligation (ECO) a £1 billion levy on energy bills which offers 200,000 households the affordability to keep warm. The levy in questions which adds £29 to the average annual energy bill and is viewed as an important part of the government’s attempt to hit net zero.

The plans come shortly after 20 conservative MPs, lobbied to get environmental levies and VAT to be scrapped.

Making homes more energy efficient is a key target for the UK government, which has also rolled out plans to offer £5,000 grants to up to 90,000 British households to replace gas boilers with environmentally friendly heat pumps.

As it stands, approximately £159 of the current consumer price cap of £1,277 for average energy usage is spent on governmental social and environmental schemes with a further £61 on VAT.

Making homes more energy efficient is a key target for the UK government, which has also rolled out plans to offer £5,000 grants to up to 90,000 British households to replace gas boilers with environmentally friendly heat pumps. As it stands, approximately £159 of the current consumer price cap of £1,277 for average energy usage is spent on governmental social and environmental schemes with a further £61 on VAT. However, the government has expressed the green levy is crucial to meeting their net zero goal by 2050, It also provides a £290 yearly saving for the 200,000 UK households that have been improved under the scheme.

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Government scrambles for cost-saving measures as energy market meltdown continues to bite the vulnerable.

Business Secretary Kwasi Kwarteng held crisis talks with energy industry bosses last month, with both parties agreeing consumers needed to be protected from rising costs, but no specific policies were agreed.

On Monday the prime minister emphasised with households stating that he understands the burden people are facing with household finances. Mr Johnson added that energy costs were “just one component” of the pressure on households. “There’s a general inflationary pressure caused by the world economy coming back from Covid, and in the US, I think, inflation is likely to be the highest it’s been since the early Eighties,” he said

Energy suppliers are desperate for the price cap to rise so that they can pass on wholesale gas prices, which rose above £4 per term last month. However, without any reforms to the cap or protective measures announced, the rising bills will continue will depend on domestic consumers.

One government source said that the Department for Business, Energy and Industrial Strategy is opposed to cutting the levy, which it believes would be a “retrograde” step.

Labour suggested an expansion of the Warm Homes Discount Scheme which offers a £140 saving to 2.2m of the UK’s poorest households, however this would not offset a potential whopping £700 increase in annual bills.

The question on the lips of many small businesses is, “when are we going to get some help”? 

Because if it isn’t forthcoming soon, the high street is going to be empty. 

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