Belfast Telegraph

Thursday 2 October 2014

Coalition split over green energy

The chief of SSE says a 10% price hike would be "helpful" if it focused the nation on its spending priorities

A coalition row over the future of green energy levies erupted into the open as Business Secretary Vince Cable said any attempt to ditch the policies would be "short-sighted and foolish".

The Prime Minister's spokesman indicated the levies were under review, with the Government looking "across the board" at ways to reduce pressures on household finances.

He said Mr Cameron was clear the measures, aimed at boosting renewable energy production, "shouldn't be there for a second longer than they need to".

Asked if the levies were under review, he said: "You would expect us, when family budgets are under pressure, to be looking at ways of whether or not more can be done to help them.

"That's what the Government will be doing."

He said the Government would look "across the board at ways in which hardworking families whose budgets are squeezed could be supported".

"We have been doing that. You have seen measures in this context previously through things like council tax, fuel duty, rail fares and the like," he said.

"The Government has indicated it will continue to look at ways in which families can be supported."

Mr Cable confirmed that arguments over subsidies for renewable energy were raging within the coalition, with Liberal Democrat ministers fighting pressure from Conservative colleagues to shift focus away from carbon-reduction commitments.

His comments came as the chief executive of energy company SSE, which has raised its prices by up to 10%, called for a debate on the "green agenda", which he claims will lead to more bill hikes in the future.

Alistair Phillips-Davies said SSE's price hike, which will push a typical dual-fuel customer bill up by £106 to £1,380 a year, would be "helpful" if it focused the nation on its spending priorities.

SSE believes bills would fall by £110 per household overnight if the Government covered green energy subsidies and the cost of other schemes, such as free loft insulation, through the tax system.

Mr Phillips-Davies told the Daily Telegraph: "A price rise is never a good thing to do, but if it focuses everyone on to a debate about what we as a nation should be spending money on, then in one way it will be helpful.

"We need to think about what people really want to pay for. Maybe it's time to retreat from decarbonisation and focus more on the cost of living. I think we have to have a debate about it.

"Do we want to be replacing one bit of (energy) generation that we can keep going for a bit longer with a new bit of generation that's going to cost more?"

He added: "I doubt the public like price increases of this magnitude, but if we carry on firmly behind the green agenda, we will continue to have price increases like this."

But Mr Cable insisted that the consumer will gain in the long run from investment in renewable energy sources such as wind, and denied that green policies were a major factor in pushing up prices.

The Business Secretary told BBC Radio 4's Today programme: "The rise in energy prices is due to a whole variety of things, by far the most important of which is what's happening in world energy markets.

"We've had, over a period of years, very rapidly rising demand in Asia, particularly in China. We've had restrictions on supply from countries like Iran. A combination of these things has pushed up oil and gas prices and that is what has fed through to consumers.

"What we shouldn't be doing is scrapping our environmental policies. That would be very short-sighted and foolish.

"If you are taking a long-term view about shifting the British economy on to a less polluting, less carbon-based system, we have to provide those incentives. What will happen in the long term is that the costs of renewable energy will fall. We've already seen this with solar power, it's beginning to happen with offshore wind.

"We are investing very heavily in it, Britain is the largest offshore wind sector in the world, and the more we do, the more costs will fall, and the consumer will benefit from it."

Mr Cable acknowledged that Liberal Democrat ministers had to fight for carbon reduction policies within the coalition.

"It is a continuing argument in the coalition, because Liberal Democrats have been arguing that we need to maintain a long-term priority towards a less carbon-based and polluting economy, and we have to make the decisions associated with that," he said.

Labour leader Ed Miliband said: "We would enforce the price freeze through legislation, we would set out legislation straight after the next election to ensure that the freeze happens and its real and meaningful.

"I can assure people that this freeze will happen if there's a Labour government, it won't happen if there's a Conservative government or a Conservative lead government, but it will happen under a Labour government.

"What we need to do is to freeze prices and then reform the energy market and so we have a market that properly works.

"David Cameron defends the energy companies and that's what you would expect from him. But what most families and businesses know is its a massive problem for them, the companies are making huge profits at their expense and the market is not working."

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