Raise taxes or gas bills to save net zero, Miliband urged

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21-05-2025

Ed Miliband must consider raising taxes or gas bills if the UK is to have any hope of hitting net zero, the Government's climate change quango has warned.
To ensure his flagship policy succeeds, the Climate Change Committee (CCC) said the Energy Secretary needs to remove green levies from household power costs.
However, to pay for this, it said the levies should be shifted onto gas bills or covered by general taxation. The quango stopped short of saying which one it preferred.
The recommendation was part of a new report demanding a rethink of power bills across the UK amid mounting scrutiny of Mr Miliband's bid to hit net zero by 2050.
The quango said it was concerned that high electricity prices were preventing households from buying heat pumps and electric cars, which in turn was holding back the green energy transition.
As a result, it said ministers 'should remove policy costs and levies from electricity bills' and shift the burden elsewhere.
Green levies have proven increasingly controversial in recent years as they have been added to bills to help support wind, solar and other renewables projects.
Independent estimates suggest there are around a dozen levies adding £18bn a year to power bills, with the CCC claiming they must be removed to help ease the financial burden on consumers.
It said: 'Making electricity cheaper, through rebalancing prices to remove policy levies from electricity bills, is a key recommendation the committee have made to the UK Government.'
The request forms part of a broader warning that the UK is making too little progress on meeting its carbon emission reduction targets.
This is a particular problem in Scotland, which has set itself a target of hitting net zero by 2045 – five years before the rest of the UK.
To achieve, the CCC said that 1m Scottish homeowners must be persuaded to replace their oil and gas boilers with heat pumps by 2035
Over the same period, it said 1.8m Scottish drivers also needed to replace their petrol and diesel cars or vans with electric vehicles.
Similar adoption rates are also required in the rest of the UK, as the CCC said that by 2040, half of UK homes should have a heat pump, compared to around 1pc in 2023.
'This requires the annual rate of heat pump installations in existing residential properties to rise from 60,000 in 2023 to nearly 450,000 by 2030 and around 1.5m by 2035,' it said.
However, the CCC said this transition will never happen unless levies are removed from power bills.
The cost of those levies was totted up for the first time in two reports published this month, one by energy analyst Kathryn Porter and the other by the Renewable Energy Foundation (REF), a charity.
Ms Porter calculated that 10 subsidies were adding £18bn to bills, while REF reached a total of £12bn.
Ms Porter said: 'Ed Miliband claims that renewables are cheap and will lead to lower bills. This sounds great, but unfortunately is not true.
'The UK has the highest industrial electricity prices in the world and the fourth highest domestic electricity prices, with many of the costs paid by consumers resulting from policy choices [levies] designed to support renewable generation.'
The CCC said it had modelled two alternative ways of replacing the levies on power bills.
One would be to move the charges solely on to gas bills, which would drive up the running costs for gas boilers and cookers.
The second approach would see the cost of energy levies added to general taxation.
However, a spokesman stressed that it did not have a preference on the best way of raising money: 'We aren't policy prescriptive about where these costs go – there are lots of different ways this could be done.
'The overall point we're making is that cheaper electricity will mean that using electric products – for both households and businesses – will become cheaper.'
Critics say the better solution would be to cut subsidies overall.
John Constable, director of REF, said: 'The CCC proposes to 'make electricity cheaper' by moving subsidy costs from energy bills to taxes.
'Of course, this does not actually make electricity cheaper, it just forces somebody else to pay, in this case taxpayers who are already at breaking point. The economically and morally correct solution is to cut the subsidies to renewable generators.'
Richard Tice, Reform energy spokesman, added: 'The great renewable con is rapidly being exposed as more expensive.'
A government spokesman said: 'Our clean power mission is the route to energy security, protecting families by bringing bills down for good and creating good jobs.
'We will continue to work together with all the devolved governments to deliver our clean energy superpower mission and accelerate to net zero in a way that treads lightly on people's lives.'
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