Andy Burnham is examining Andy Burnham energy bill proposals that could cut household energy bills by £130 a year and make heat pumps cheaper to run than gas boilers. His team is looking at a Nesta plan that would change how household gas is charged and move some policy levies off bills.
The proposal would also shift costs into taxation and carry a £3.2bn a year bill for the taxpayer. Burnham promised on Friday to reduce the price of “essentials” as he prepared his first announcements in Downing Street.
Andy Burnham and Nesta
Nesta drew up the plan and Andrew Sissons, its director of sustainable future project, said the current system loads “legacy policy costs” heavily on to electricity bills. He said: “For years, legacy policy costs have been heavily loaded on to electricity bills, making clean heating options artificially expensive.”
Sissons also said: “By combining a zero-taxpayer-cost reform of the gas standing charge with these targeted tariff cuts, the government can deliver around £130 a year in immediate financial relief for the majority of UK households, while making clean heating the cheapest option on the market.”
Downing Street and the bills
The gas standing charge now adds about 29p a day to bills and covers the cost of maintaining gas grids and meters regardless of how much energy a household uses. Nesta says moving renewable energy levies into general taxation would lower electricity costs by £42 a year, while reducing VAT on electricity bills would save another £41 a year.
On Nesta’s figures, those changes would be worth about £130 a year in total. The group said bills would fall for 84% of the poorest households, and the poorest households would save £22 a year overall.
Labour on Monday
Nesta also said the government should wipe out the backlog of consumer electricity debts at a one-off cost of £2.7bn. That would provide relief for about 2 million households and cut the £29 a year paid by all households to cover the cost of unpaid bills.
Burnham said on Friday that he had made no final decisions about his top team, and that team is expected to be announced on Monday. The package would then need funding in this autumn budget, where the new chancellor would have to decide how to meet the cost.
