Carbon tax - just pushing more people into fuel poverty?

12 November 2012

It’s easy to be green when things are rosy in your garden. Back when the Government decided to start tackling energy emissions in 2001, everything was indeed, peachy. But it’s hard to be green when you’re in the red, and the new carbon tax- levies on CO2 emissions- will hit both commercial and domestic energy bills from next year.

However, a new report from our consumer action friends over at Consumer Focus suggests that this new policy is actually going to make things worse for millions of people, without any corresponding benefit. Sound like a typical Government policy to you?

The levies, which will add around £21 per household bills from 2013 at a time when many are struggling to pay, is set to rise to £39 by 2020. At the same time, the number of households in fuel poverty (spending more than 10% of income on energy bills) is set to rise from the massive 6 million today, to an even more colossal 9 million by just 2016.

The thrust of the report is to question where the extra cash, expected to add up to a tidy £63bn by 2027 and bringing in £2.7bn next year alone, is going to be spent. Consumer Focus think that some, if not all, should be spent on improving homes to reduce energy bills going forward. The report estimates that 90% of those in fuel poverty could be lifted out of danger through reinvestment in energy saving, generating a household bill saving of over £200 a year. The report wants to see the current ‘Green Deal’, which allows you to pay off the cost of home improvements over a number of years through energy efficiency savings, extended, with more help going to the very poorest and least energy efficient houses. The plans would also create tens of thousands of new jobs in the energy-efficiency industry, they claim.

Consumer Focus, and the report’s authors, think this is a better use of the money than investing in infrastructure or Government spending (you don’t say), but also better than reducing fuel duty or VAT. While reducing fuel duty is presumably not in line with the green agenda, reducing VAT would, presumably, help everyone, not just certain groups. But didn’t we try reducing VAT a couple of years ago, to much fanfare of it ‘boosting the economy’, only to find it had absolutely no effect on anyone, other than to annoy retailers?

Either way, the carbon tax levy is coming to a gas bill near you- we’ll just have to hope the Government does something sensible with your money…


  • foxes
    So if I spend more than 10% of my income on something then it's poverty? Could I be in gambling poverty, for example? Lots of us are in tax poverty, mortgage poverty etc.
  • Mykeff
    @foxes Don't be ridiculous. You chose to buy a house. Don't conflate luxury with necessity. Perhaps you'd like to class your Waitrose outgoings as poverty-inducing. I'm sure those struggling to heat themselves this winter will be worrying about your tax burden,
  • Milky
    @ Mykeff So owning a house is now a luxury rather than necessity? Everyone should be able to own their own house, its just far too expensive in this messed up country.
  • Mykeff
    @milky Yes, ultimately it is a luxury. I agree about the cost, precisely because home ownership is seen as a means to accrue money. Buying rather than renting may be preferable, but it's the shelter that counts as a necessity, along with food and warmth.
  • Andrew
    "Posted by Milky • November 12, 2012 at 2:48 pm @ Mykeff So owning a house is now a luxury rather than necessity? Everyone should be able to own their own house, its just far too expensive in this messed up country." Yes, owning some bricks and mortar worth hundreds of thousands of pounds which accrues obscene amounts in value because of messed up planning laws, is in fact a luxury. Not to be confused with having a roof over one's head.

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