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Will my energy bill go up? Green levies return to bills as campaigners say they should be funded by taxes

Fuel poverty campaigners are calling for green levies designed to fund schemes such as home insulation to be funded through taxation rather than being fed back into energy bills.

A two-year suspension of the levies, which add around £170 a year to an energy bill, was announced last autumn by the Liz Truss government amid rising fuel prices. It meant the levies were temporarily funded by the Treasury.

But that funding has now come to an end after just nine months, along with the demise of the Government’s energy price guarantee, as energy prices have fallen.

However, the levies will go unnoticed by billpayers as bills are dropping and the new, lower price cap set by the regulator Ofgem is thought to have already factored in the costs.

Simon Francis, the co-ordinator of the End Fuel Poverty Coalition, said: “We would prefer the vital funding needed for long-term energy efficiency and fuel poverty prevention programmes to be funded through general taxation.

“These programmes are vital to ensuring we end fuel poverty in the long run. The Government could have used the time that the energy price guarantee was in place to work out a way of doing this fairly rather than through energy bills.”

He added: “Our understanding is that Ofgem has already included these costs as part of the price cap that came in on 1 July, so this is not an increase on people’s bills from what has already been announced.

“If the Government did move funding off bills and onto general taxation, that would result in a welcome reduction in bills this winter.”

Around 27 million homes in England, Scotland and Wales can expect their energy costs to drop over the summer after industry regulator Ofgem lowered the price cap on a typical annual dual-fuel tariff to £2,074 a year.

However, research by the Money Advice Trust suggests that around 5.5 million UK adults are now in energy bills debt – a rise of 2.1 million on the previous year.

Campaigners are calling on the Government to help households more this coming winter as people’s savings are being eroded by inflation and high energy bills.

Mr Francis said: “The dangerous combination of inflation, high energy prices and reduced savings means that people will be even less able to keep themselves warm this winter. We’re already seeing record levels of energy bills debt being racked up. People just won’t be able to cope.

“We need a programme of debt relief as well as more financial support for the most vulnerable this winter – alongside ramped up programmes to improve energy efficiency.”

A Government spokesperson said: “Thanks to falling wholesale prices and Ofgem’s new price cap – energy bills come down by around £430 on average and customers will not be affected by a price increase from green levies.

“Levies more than pay for themselves by driving investment in renewables and other generation technology and have saved consumers money on their energy bills overall over the past 10 years.

“We’re working with consumer groups and industry to assess the best long-term approach to helping vulnerable households, as part of wider market reforms.”

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