UK government criticised for lack of transparency over subsidies
The UK government has been criticised for a “shambolic” approach to transparency with regard to the impact of green energy subsidies on UK household energy bills. A report by the Parliamentary Public Accounts Committee claimed that the government had failed to honour its 2014 commitment to publish annual reports outlining the effect of solar and wind energy subsidies on consumer bills. Subsidies for renewable energy are paid for by consumers via energy levies. An overspend on such subsidies is expected to cause a £17 rise in average household bills in 2020.

MPs have criticised ministers for their “shambolic” failure to regularly spell out the impact of government green policies on household energy bills.

The Commons public accounts committee said the government had missed its commitment to publishing annual reports on how consumer bills were affected by subsidies to support solar and wind power.

The Department of Energy and Climate Change made the pledge in July 2014, but has not given an update on the implications for householders since November that year. Renewable energy subsidies such as the feed-in tariff for solar power are ultimately paid by consumers through government levies on energy bills.

“Either they’re trying to hide something or they’re incompetent. It’s not on, because it affects both the [energy industry] supply chain and consumers,” said Labour MP Meg Hillier, the committee’s chair.

“If it was taxes, we’d all be looking at it much more closely – but it’s still money out of people’s pockets and it’s not acceptable. It’s just shambolic really.”

In a report published on Tuesday, the committee said officials should disclose the costs and savings from the green policies so consumers could decide if they were good value for money.

An overspend on renewable energy subsidies – due to so much green energy being deployed – is forecast to push the average household bill £17 higher than it would have been in 2020. The committee said the overspend reflected “a culture of optimism bias” among officials at the department, now part of the Department for Business, Energy and Industrial Strategy.

A BEIS spokewoman said: “The government is committed to helping ordinary working people keep more of what they earn and supporting households with the cost of living.”

Sam Hall, researcher at the thinktank Bright Blue, welcomed the call for greater transparency. “One area where more clarity is needed is the cost to consumers of excluding the cheapest renewable energy sources, onshore wind and solar, from competing for fixed-price contracts,” he said.

Hillier said that even if the government acquiesced to the committee’s demand of publishing a report in April, it would only be a partial one. For example, it would not include the £378m consumers will pay via their bills for backup power subsidies next winter.

The committee dismissed a BEIS report last November, which it said did not break down the impacts of policies to a household level, and did not show the savings that policies could bring, such as reducing consumers’ exposure to volatile fossil fuel prices.

The report came as the energy regulator announced details of an energy price cap from 1 April for about 4m households on prepayment meters. Such coin- and token-operated meters are mostly used in rental properties and for customers who have fallen behind on their payments.

Ofgem estimated the cap would save people on prepayment tariffs up to £80 a year on energy, bringing their dual fuel bill down to around £1,067. That would leave those households paying essentially the same as direct debit customers on the worst, most expensive deals, known as standard variable tariffs.

Consumer groups and switching sites welcomed the protections for some of the poorest energy users.



“For years prepayment meter customers have been paying more for the same gas and electricity as other customers, whilst also receiving a second-class service from their supplier,” said Gillian Guy, chief executive of Citizens Advice.

There are only about 30 prepayment tariffs, compared with about 90 for direct debit customers. Martin Lewis of personal finance site MoneySavingExpert.com said the cap was a “welcome sticking plaster” but suggested people on prepayment meters should be able to access all tariffs if they paid a small surcharge.

“All the cheap deals offered are for direct debit, and they can be £300-£400 a year cheaper than prepay prices for someone on typical use,” he said. “That is a national disgrace, because most of the poorest people in our society have prepayment meters – the most potent poverty premium possible.”

The price cap, one of the recommendations by the competition regulator after its investigation into the energy market, will stay in place until the end of 2020 when all the UK’s homes are expected to have been switched to smart meters.

The limit comes just days after npower raised its prices by £109 for a typical customer, and amid reports that British Gas was preparing a similar rise. A spokesman for the company, the UK’s biggest energy supplier, said it did not speculate on future pricing. Ofgem recently said it saw no excuse for the big six energy suppliers to raise prices.