Tag: Chancellor

Reaction to Spring 2024 Budget

The latest financial statement from the Chancellor failed to meet in full any of the recommendations set out by the End Fuel Poverty Coalition in its budget submission.

While the energy firms Windfall Tax and the Household Support Fund were both extended for limited periods, other support measures end on the 31 March.

The budget also contained no new funding for energy efficiency support.

A spokesperson for the End Fuel Poverty Coalition commented:

“What we needed from the Chancellor was a long term plan for warm homes and cheaper energy, but instead the government has condemned families to another winter in cold homes and has failed to fund reform to Britain’s broken energy system.

“The government is pulling the plug on support for households in fuel poverty. The Energy Price Guarantee and the cost of living payments now join the Energy Bills Support Scheme on a bonfire of policies that were helping people with surging energy bills. The Household Support Fund will be extended, but only for another 6 months – ending before next winter sets in. 

“But as this support is axed, the price households pay for their energy is still 60% higher than in 2021 and levels of energy debt are soaring. Meanwhile the wider cost of living crisis means people simply can’t afford to keep the lights on.

“While the extension of the Windfall Tax is a recognition that the energy crisis is not over, economists estimate that it has actually shaved £18bn off the cost of extracting fossil fuels over next three years by increasing energy firms’ tax relief allowances. This loophole must be closed.”

Jonathan Bean, from Fuel Poverty Action added:

“Removing the loopholes in windfall taxes on huge energy firm profits would fund essential energy for all.“

Warm This Winter spokesperson Fiona Waters said:

“Today’s budget is a waste of energy that will still leave millions out in the cold.

“There’s some cold comfort in the extension of the Housing Support Fund but it will barely make a dent in the huge debt ordinary people have now built up as they struggle to pay sky high bills that are still 60% more than three years ago.

“Families, pensioners, children and the poor are freezing as energy companies make a billion pounds in profit each and every week.”

Will Walker from Warm This Winter campaign members Ashden, commented on X that the budget was “barren” and that:

“Unfortunately, what we’ve seen over the last decade from Government is dither, delay and division on net zero. This has undermined business and investor confidence, weakened supply chains and added to UK energy bills.”

Joanna Elson CBE, chief executive of Independent Age, said:

“Today’s Budget was a missed opportunity to help those in later life already living in financial hardship and address the incoming pensioner poverty surge. Cutting National Insurance won’t help the more than 2 million older people living in poverty, or the many more living with precarious finances struggling to make ends meet. Transformative change is needed to improve their lives.

“While the lower energy price cap and the increased State Pension are welcome, there is still a long way to go for older people in financial insecurity to be able to afford even the basics. Bills are still astronomically high, and our helpline hears daily from older people rationing themselves to just one meal a day and washing in cold water to save energy.

“The cost-of-living payments have ended and older people in financial hardship are already at breaking point. While the temporary extension of the Household Support Fund is welcome, long-term solutions are needed to protect them from high household costs. The UK Government needs to introduce a single energy social tariff and water social tariff. This would help shield people of all ages living on a low income, including older people, from high and unmanageable costs.

“Today, the UK Government reiterated its commitment to uprate Pension Credit, but it must now implement a strategic and targeted plan to get this money into eligible pockets. As the latest figures show that up to 880,000 households missed out, an uptake strategy is urgently needed to target those who need financial support but aren’t aware it exists or don’t know they are eligible.

“Pensioner poverty has been steadily rising since 2012. Sadly, nothing announced today will reverse this alarming trend. That’s why we need a cross-party review to establish an adequate minimum level of income needed to avoid poverty in later life. Until that happens, we risk seeing more older people fall into financial hardship.”

Image credit: Warm This Winter / © Jess Hurd

Closing tax loopholes could raise £22bn to tackle energy bills crisis

Removing the tax incentive loophole in the government’s energy profits levy would have generated at least £22bn in additional revenue.

The investment incentive loophole allows oil and gas firms to claw back more than 91% of their capital investment in the form of tax relief.

This then incentivises further investment in exploring and extracting more oil and gas that will worsen climate change and do little to address the energy crisis. The loophole has already been exploited by companies including Shell, which paid no windfall tax this year despite the tax operating since May.

As reported exclusively in the Independent, closing this loophole alone could pay for emergency insulation measures for 3.31 million households and cut energy costs by £336 per year per household next year.

Produced by the New Economics Foundation for the Warm this Winter coalition, which includes End Fuel Poverty Coalition, Possible, Uplift and Green Alliance, the report analysed the savings from a programme of tax and spend that the Chancellor could have chosen instead, focusing on energy efficiency and insulation.

Previously the End Fuel Poverty Coalition has indicated that the cost of keeping everyone warm this winter would be in the region of £14 billion.

The research also outlines how, if the government got on with the job of more than tripling installed capacity of onshore wind, offshore wind and solar by 2030, then there would be £28.5 billion of savings to the UK’s energy system by 2025. If the government unblocks onshore wind and avoids restricting new solar energy projects, this would save an additional of £3.1 billion by 2025 compared to the current scenario.

Polling conducted by Survation to coincide with the research found that 85% of people in the UK support a windfall tax to invest in insulation and lower energy bills.

Amongst those who voted Conservative in 2019, 85% supported these measures, and among those who intend to vote Conservative in the next election 87% of people supported this.  81% want to see the government speed up the development of onshore wind and solar energy to less reliance on gas.

The findings are being released on Fuel Poverty Awareness Day and as the government considers an amendment to the Levelling-up and Regeneration Bill that would remove the ban on onshore wind in England, and as the government is consulting on a £1bn programme on energy efficiency.

A spokesperson for the End Fuel Poverty Coalition, commented:

Millions of people are now condemned to facing the misery of living in cold damp homes this winter, but these calculations show that these are political choices.

The Government has plenty of room to help out.

Not only could the solutions proposed by the Warm This Winter campaign save households money and alleviate some of the worst effects of fuel poverty this winter, but they would be cost neutral to the Government.

Sadly the Government chose a different path and now will have to brace itself for a fuel poverty-led surge on the NHS this winter.

Alethea Warrington, campaigns manager at climate charity Possible, said:

Getting off gas for good with renewable energy would cut energy bills and emissions, helping us to build a safer future for all.

Oil and gas producers are raking in record profits, even as people’s homes get colder and our climate gets hotter.

Despite this, the government is still resisting unblocking onshore wind, even though it’s a vital source of clean, cheap energy which is highly popular across the UK.

We need urgent action to get on with the job of delivering clean energy and insulation so we can end reliance on polluting, expensive gas.

Tessa Khan, director of Uplift, said:

For a small fraction of the money this government is prepared to spend subsidising gas fields and on expensive gas imports, it could be investing in sensible solutions that will end up saving the Treasury money and lead to permanently lower bills for households.

Practical, proven measures, like home insulation and affordable onshore renewables are what this country needs, not more wasteful deals with profiteering gas giants that are pushing millions into fuel poverty. The first priority of this government must be to the people in the UK, not their profits.

Emmet Kiberd, economist at NEF, said:

Warm this Winter’s proposals would boost growth, create jobs and help us meet our national net zero commitments and could be fully funded by making oil and gas firms pay their fair share in windfall taxes.

Removing the investment incentive for oil and gas firms would easily fund a £3.6bn programme of energy efficiency improvements over the next two years, while still leaving the oil and gas sector with profits after tax around the normal level.

Coalition responds to Chancellor’s autumn statement

End Fuel Poverty Coalition members have reacted to the Chancellor’s autumn statement as it has been confirmed that Coalition members will be joining forces with others in the Warm This Winter campaign to call for a day of action on 3 December to protest at the lack of UK Government support for those in fuel poverty.

A spokesperson for the End Fuel Poverty Coalition, commented:

The Chancellor has now condemned 7 million households to suffer in fuel poverty this winter. The rise in the energy price cap from April next year could see this figure increase to 8.6 million households.

We are already seeing the horrific impact of living in cold damp homes on children, the elderly, disabled and those with illnesses ranging from cancer to asthma. Even with the additional funding pledged to the NHS and social care system today, we are deeply concerned that it will be overwhelmed by the energy bills crisis and millions will suffer.

The Chancellor could have raised all the money required to save the public from fuel poverty this winter through a more comprehensive Windfall Tax. Instead, he has chosen to protect the profits of oil and gas firms over protecting people’s lives.

A film by the Warm This Winter campaign summarised the criticisms of the Budget.

Tessa Khan from Uplift commented:

The chancellor rightly diagnosed climate breakdown and energy affordability as two of the biggest challenges we face, but has sided today with the industry driving both: oil and gas.

Until this year, the UK offered among the most lucrative tax conditions for oil and gas producers in the world. The rise in the rate of the windfall tax to 35% is therefore welcome, but it is a temporary fix when what is needed is permanent reform.

More alarmingly, Hunt has failed to close the gaping tax loophole that allows companies such as Shell to avoid tax if they invest in new oil and gas fields. It also gives them an even bigger handout if they choose to power their oil and gas rigs using wind – despite the fact that the vast majority of emissions come from burning, not extracting, oil.

Not only will this see billions in lost tax, it sends us in precisely the opposite direction to the one that will get us out of this hole for good.

This is the “highway to climate hell”, that the UN secretary general, António Guterres, warned world leaders about at Cop27.

It is also the route to permanently high energy bills.

Electricity generators have also been hit with a 45% windfall tax but without the generous allowance for new investment that oil and gas companies benefit from.

This is an absurd outcome given the dual crises we face of climate breakdown and energy affordability.

Alethea Warrington, from climate charity Possible, which is part of the Warm This Winter campaign, said:

The Chancellor’s windfall tax doesn’t go far enough on dirty fossil fuels, while clean energy generators got slapped with the biggest single levy increase in the budget.

This is completely backwards.

Oil and gas companies continue to reap eye-watering profits while the climate and people across the UK feel the burn.

The government should act to increase clean, cheap energy by unblocking onshore wind and implement a bigger windfall tax on oil and gas companies.

This would provide the funds we need to keep everyone warmer this winter by insulating our homes and cutting bills for those who need it most.

While the Government did announce funding for energy efficiency measures and a new task force to make it the nation’s mission to improve buildings, Sam Alvis, head of economy at Green Alliance, said:

The chancellor is asking people to wait another three years to get their home insulated when they urgently need help now. Promises for after the next election isn’t good enough.

Today was more about raising money than spending it. It’s right that oil and gas companies are being asked to pay more, but it’s still unclear why the UK isn’t levying the same tax rate as Norway.

While the investment allowance has shrunk for oil and gas, electricity generators aren’t getting the same incentives.