Burnham considers energy bill cuts of £130 per year
7 reported
Andy Burnham is considering proposals that could reduce household energy bills by £130 annually and make heat pump operation cheaper than gas boilers, according to a report from the thinktank Nesta being examined by his team. The plan would change how household gas is charged and remove some policy levies from bills, costing taxpayers £3.2bn per year. In his speech on Friday as the new Labour leader, Burnham promised to reduce the price of essentials, with a cost of living package expected among his first announcements. The proposals also include wiping out the backlog of consumer electricity debts at a one-off cost of £2.7bn, providing debt relief for about 2 million households. Nesta’s approach targets the standing charge on gas bills, moving those costs into the overall rate so higher-income households shoulder more grid costs. Without intervention, household energy bills are expected to rise this winter due to the conflict in the Middle East pushing up oil and gas prices. Burnham’s team was approached for comment.
What’s reported
The proposal could cut household energy bills by £130 a year and make heat pumps cheaper than gas boilers.
The plan would change how household gas is charged and remove some policy levies from bills at a cost of £3.2bn a year to taxpayers.
Nesta argues the government should also wipe out consumer electricity debts at a one-off cost of £2.7bn, helping about 2 million households.
The standing charge on gas bills currently adds about 29p a day to bills regardless of energy use.
Moving standing charges into overall costs would save 84% of the poorest households £22 a year from bills.
Moving renewable energy levies into general taxation would lower electricity costs by £42 a year, and reducing VAT on electricity would save another £41 a year.
In July, the cap on gas and electricity rates rose 13% to the equivalent of £1,862 a year for the average household.
Key figures
Andy Burnham, new Labour leader
Andrew Sissons, director of Nesta’s sustainable future project
Ed Miliband, energy secretary
Shabana Mahmood, home secretary
Rachel Reeves, outgoing chancellor
Sources: The Guardian
