ECA’s solution to rising bills could save 70% of UK households £100 a year

ECA’s solution to rising bills could save 70% of UK households £100 a year

ECA is calling on the next Prime Minister to tackle the cost-of-living crisis by immediately changing the way electricity and gas are taxed.

In an open letter sent today to Rishi Sunak and Liz Truss, backed by signatories including leading construction industry bodies BESA, BSRIA, FETA and SELECT, ECA is urging the next Prime Minister to shift the balance of levies from electricity to gas, thereby encouraging a switch to electricity.

“Sky-high energy bills are one of the biggest factors in the ongoing cost-of-living crisis,” said ECA Director of Workforce and Public Affairs Andrew Eldred. “By changing the way different energy sources are levied, 70 per cent of households could immediately save up to £100 a year.

“With one small act, the next PM could throw a lifeline to millions of struggling families desperately worried by the prospect of ever-rising energy price caps.”

Fuel levies on domestic electricity bills are 20 per cent higher than on gas bills, meaning renewable energy is more heavily taxed than gas.

Research by E.On shows that rebalancing these levies, known as ‘green’ levies, will drive down the cost of electricity and reduce 70 per cent of customers’ bills by up to £100.

As well as cutting bills, balanced ‘green’ levies would incentivise renewable energy – the cheapest form of energy we have – and avoid the need to resort to importing gas from abroad.

ECA and its co-signatories want to establish fairness within the taxation system between electricity and gas to alleviate fuel poverty and give the UK greater energy security. The group’s open letter to Rishi Sunak and Liz Truss reads:

“Electricity prices are currently four times higher than gas, meaning renewable energy is more heavily taxed than gas. According to the ONS, households using electricity as the main fuel for heating were the most likely to experience fuel poverty. By addressing this historic tax anomaly, the new leader will reach those who are hardest hit by rising fuel bills.

“Energy levies are complicated and play a critical role in driving energy independence in the UK. Simply scrapping them will have significant unintended consequences. In our view there are better alternatives, ideally achieving parity between electricity and gas, but if not, moving them immediately into general taxation.

“In 2020, 43 per cent of UK electricity was produced by home grown renewable sources and the percentage is accelerating at pace. By further incentivizing the switch to clean electricity we are reducing our reliance on imported gas from Russia or elsewhere.”