David Cameron places UK green energy subsidies under review

David Cameron has put the government's green energy subsidies under review, setting the coalition parties on a collision course as the prime minister scrambles to find ways of cutting energy bills in the face of Labour's promised price freeze.

The prime minister's spokesman confirmed on Friday that the government's £1.3bn Energy Companies Obligation subsidy was among a series of policies under review as the coalition looks to ease pressure on family budgets.

Energy bills are back in the spotlight this week after SSE announced an 8.2 per cent rise in energy bills on Thursday.

"In the context where people's budgets are squeezed they would expect us to look across the range of what can be done," said the prime minister's spokesman when asked whether the ECO programme was under review. "That is what the government will be doing."

The Financial Times revealed on Monday that officials and ministers are examining at least three programmes with a view to reining back costs: the ECO, the carbon floor price and renewable obligation certificates.

Downing Street's determination to water down some green policies as part of efforts to keep power bills from rising further is a political flashpoint within the coalition, with the Liberal Democrats adamant that green subsidies must stay in place.

Vince Cable, the business secretary, this morning told BBC's Today programme that any attempt to row back on green energy subsidies would be "short-sighted and foolish".

Strikingly, however, the biggest government support scheme for green energy - which could provide billions of pounds annually to producers of low-carbon power - has remained out of the spotlight.

The "levy control framework" will guarantee the price of energy from wind farms and nuclear power and is the centrepiece of the current energy bill. It has, so far, been excluded from Mr Cameron's review.

The prime minister's position was bolstered on Thursday after SSE said that green energy subsidies were contributing to rising bills as it announced an 8.2 per cent price rise. The energy supplier called for a complete rethink of government green policies, saying public support for an expensive shift to low-carbon power was waning as bills soared.

Ed Davey, the Lib Dem energy secretary, has disputed this argument. He is now asking all the big energy suppliers to provide more detail on the economic impact of the ECO subsidy on household bills as he puts together a dossier of evidence ahead of a looming battle with his Conservative colleagues in the coming weeks.

<

The tabular content relating to this article is not available to view. Apologies in advance for the inconvenience caused.

Ακολουθήστε το Euro2day.gr στο Google News!Παρακολουθήστε τις εξελίξεις με την υπογραφη εγκυρότητας του Euro2day.gr

FOLLOW USΑκολουθήστε τη σελίδα του Euro2day.gr στο Linkedin

Mr Cable repeated that argument on Friday morning, saying: "The rise in energy prices is due to a whole variety of things, by far the most important of which is what's happening in world energy markets."

The plan to cut the ECO was attacked as "unforgivable" by the government's own adviser on fuel poverty.

Derek Lickorish, chair of the government's Fuel Poverty Advisory Group, said: "It is completely inequitable to attack the only measure that is doing something for the fuel poor in England." The ECO - which provides insulation for lower-income households - was a way to cut people's bills in the long term, he argued.

The government could face a judicial review if it goes ahead with cuts to the ECO because of its statutory commitments to reducing fuel poverty.

© The Financial Times Limited 2013. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation