Budget 2014: £15 off household energy bills announced

19 March 2014

Families could save £15 a year on energy bills because of a freeze in carbon taxes, the government announced in the 2014 Budget.

The cash saving comes as a result of chancellor George Osborne announcing a freeze in the Carbon Price Floor (CPF).

The CPF is a tax on fossil fuels used to generate electricity and came into effect in April 2013 in a bid to try and encourage energy firms to invest more in green energy.

The move proved controversial as it has led to an increase in bills for businesses as well as households.

Consumer and business groups welcomed the tax freeze, claiming it will help ease the burden on manufacturers and families struggling to pay energy bills.

Announcing a £7 billion package to cut energy bills faced by British manufacturers, the chancellor said the tax will remain at £18 per ton of CO2 from 2016 until the end of a decade.

The freeze could save British businesses more than £5 billion in 2018/19, and could slash £15 off consumers' annual energy bills. Last year, the CPF added around £5 to a typical energy bill, the Department of Energy and Climate Change said.

The cost of energy has prompted all political parties to debate the so-called "cost of living crisis" in recent months, following all of the Big Six energy companies raising their prices ahead of winter.

James Padmore, head of energy at comparethemarket.com, said: "Given the recent price hikes by the Big Six energy companies and wages failing to keep pace with inflation, it is vital that the household necessities of heating and electricity do not become increasingly unaffordable.

"Although the so-called 'pollution tax' was introduced with the best of intentions, it has come to be viewed by many struggling bill payers as an expensive stealth tax and the chancellor's move will be welcomed by families up and down the country."

A spokesman for industry body, Energy UK, cautiously welcomed the freeze: "In the overall interests of the UK, the energy industry supports capping the carbon price floor to keep costs down for heavy industrial energy users, to reduce the potential to create a cliff edge for coal generation, and to help make sure there is more capacity available," he said.

"But it also has downsides - an important one is that it worsens the economics of the essential generation of electricity from gas."

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