Energy Bills 'To Fall By £50' Under Govt Plan

Household energy bills will be reduced by an average of £50 a year under plans by the Government which will see a cut in green levies.

David Cameron and Nick Clegg confirmed the plan to reduce the burden on consumers by cutting the green taxes, which add £112 to each bill.

The cost of the Energy Company Obligation Scheme, which funds energy efficiency measures for low-income households and makes up the vast majority of the environmental levies, will be halved under the plan.

Around £12 of the £50 savings to bills will come from a reworking of the Warm Home Discount in a £300m deal. The remainder will come by switching the funding for energy measures to general taxation.

The reductions are expected to be finalised in negotiations taking place with the Big Six power firms this weekend and are to be disclosed by the Chancellor, George Osborne, in his Autumn Statement on Thursday.

They will also include the announcement of a £1,000 grant for energy efficiency measures for anyone buying a new home, which will be funded by a fresh crackdown on tax avoiders.

Labour and the Conservatives have been scrapping to gain ground with the public on energy prices as the cost-of-living looks likely to take centre stage in the run-up to the General Election.

Labour leader Ed Miliband announced in his party conference speech in September that if he was in power would freeze energy prices for 20 months.

It was followed by a series of eye-watering price increases by the so-called Big Six energy firms.

In response, Mr Cameron insisted he would roll back the green levies and in return, the energy companies should bring down prices.

However, the Liberal Democrats have insisted that environmental measures - one of their election pledges - should not be dropped and have fought to find alternative ways of funding them. The two leaders insist the plan is 'serious and credible'

Mr Osborne today insisted that the energy firms would not just pocket the green levy reductions and that the Government had been "absolutely insistent that this is passed on".

"We are doing it in the way that government can do it, which is controlling the costs that families incur because of government policies.

"We are also doing it in the way that is not going to damage the environment or in any way reduce our commitment to dealing with climate change," he told BBC's Andrew Marr Show.

The Shadow Business Minister Chuka Umunna told Sky's Dermot Murnaghan that the measures were a "pale imitation" of Labour's plans to freeze energy prices and reform the market.

Ed Balls, Shadow Chancellor, told Andrew Marr: "Anything they do is better than nothing" but that shifting the cost to households from bills to taxes was simply "taking with one had to give with the other".

In a joint article for The Sun on Sunday, Mr Cameron and Mr Clegg wrote: "Later this week, we'll announce further help: proposals that will be worth around £50 on average to energy bill-payers.

"We're doing it without taking any help away from poor families or sacrificing our green commitments; and in a way that will keep Britain's lights on in the long-term too."

The pair added: "Alongside the Green Deal, when you buy a new home, you could get up to £1,000 from Government to spend on important energy-saving measures - equivalent to half the stamp duty on the average house - or even more for particularly expensive measures.

"It's an all-round win: better insulation means cheaper bills; it's how we cut carbon emissions; and it will boost British businesses who provide these services." Bills are burned during a protest this month against prices and budget cuts

EDF, one of the Big Six welcomed the move, and said it did not expect to raise prices again before 2015.

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