A more than £1 billion energy tax windfall should be used to help fuel poor households in the forthcoming budget, the head of the charity National Energy Action (NEA) has argued.
Energy bills are subject to 5% VAT which in a typical year generates around £1.5 to £2 billion per annum. NEA estimates that the recent increase to the price cap will result in an additional £100 million for the Treasury.
Additionally, the charity said, the gas crisis has pushed the carbon price up for the UK Emission Trading Scheme by around £15/certificate since September. If the crisis persists to April, that will result in an additional £1 billion in revenue on top of the around £4 billion already collected this calendar year.
NEA chief executive Adam Scorer said this energy tax windfall should be used to assist more than 2.4 million households across the UK struggling to pay their energy bills.
He said: “It would take only a small proportion of these resources to open up Winter Fuel Payments to vulnerable working age households. Unlike the Household Support Fund, this would directly provide automatic relief to help with energy bills this winter.
“This is especially important in Northern Ireland, where households are not protected by the energy price cap or GB schemes like the Warm Home Discount. According to the N.I. Utility Regulator, households there could also be hit by a further increase in gas bills, possibly up to 50% in December.
“The UK government should also be considering how to directly help accelerate the repayment of utility debt by funding or encouraging payment matching schemes.”
Scorer warned that without emergency support, millions of households will sink further into debt or be forced to turn off their heating, becoming at risk of serious ill-health.
He added: “Soaring gas prices have gifted the Treasury a huge tax windfall. The chancellor’s true ‘fiscal responsibility’ should be to use those resources to support households who live in dread of this winter.”