Osborne to cut £75 in green tax from bills next month: Levies for low-carbon energy and insulating draughty homes will move into general taxation

Chancellor to announce cuts in Autumn Statement say sources
Average household's dual fuel bill has soared to £1,400 after hike in prices
Green levies add around £112 to average annual energy bills

Published: 01:16 BST, 4 November 2013 | Updated: 01:17 BST, 4 November 2013

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George Osbourne is planning to cut £75 of green taxes from household energy bills next month, according to industry sources

George Osbourne is planning to cut £75 of green taxes from household energy bills next month, industry sources claim.

Levies which go towards low-carbon energy and insulating draughty homes will be taken off electricity and gas bills and put into general taxation, they said.

Since David Cameron announced his intention to 'roll back' the green levies on households bills last month, this is the first time a concrete figure has been put forward.

The power industry are braced for an announcement by the chancellor in the Autumn Statement, his mini-budget on December 4, to try and contain the growing row about rising energy bills.

An average household's dual fuel bill has reached £1,400 after four of the Big Six energy firms, which cover 98pc of customers, hiked prices by an average of 9.1 per cent this winter.

Green levies add £112 to annual bills, but are set to reach £286 by 2020 according to forecasts from the Department for Energy and Climate Change, who claim in the long run they will reduce bills.

Attempts to cut down the burden have focused on the Energy Company Obligation (ECO) which is supposed to insulate the homes of people in fuel poverty but much of it is used for large, draughty homes.

It accounts for £47 of green levies - although energy companies claim it can be far higher, npower claiming it adds £69 to the average bill.

The Warm Homes Discount, costing £11 per household, which does help those struggling with their bills, could also be moved to general taxation.

But the £30 which goes in direct subsidies to wind farms and nuclear power stations is likely to stay on bills.

Ministers are thrashing out a substantial offer to reduce green levies on bills, while meeting commitments Britain has legally committed to regarding cutting carbon emissions, and overcoming the opposition of the environmentally-minded Liberal Democrats.

Energy secretary Ed Davey, a Lib Dem, announced last week there would be annual 'competition test' for the Big Six to ensure their measures of rising wholesale prices are justified, with criminal sanctions for bosses judged to have fixed prices to rip-off customers.

Energy secretary Ed Davey, a Lib Dem, announced last week there would be annual 'competition test' for the Big Six

Rising bills have dominated the agenda since Labour leader Ed Miliband announced he would freeze energy bills for 20 months if his party wins the next election.

But while moving bills to general taxation would reduce the burden on the poorest, it would mean the government will have to find potentially more than £1billion of savings in other areas.

Six bosses at the Government’s Green Investment Bank receive higher salaries than the Prime Minister.

The Cabinet Office’s list of high-earning public officials and civil servants shows five of the seven highest paid are employed by the Bank, each earning between £275,000 and £335,000. Mr Cameron earns £142,500.