Government must cancel £500 energy bill rise in April – Carmichael

28 Feb 2023

Orkney and Shetland MP, Alistair Carmichael, has today called for the Government to cancel plans to hike the average household energy bill by £500 in April, and bring in a tax on the “bonanza bonuses” of oil and gas bosses.

The party is calling for cuts to people's bills instead, combined with a new energy support package for businesses and public enterprises.

Liberal Democrat plans would mean that in the Northern Isles the average household would be £377 better off. Cumulatively, families in the isles would save £12.1m under Lib Dem proposals.

Nationally, the Liberal Democrats have set out their plan to tackle the energy crisis including: 

  • A stronger windfall tax on oil and gas companies to raise billions of pounds
  • A cancellation of the Governments £500 energy bill rise in April 
  • A one-off bonus tax on oil and gas executives
  • Doubling the Warm Homes Discount to £300.
  • A U-turn on plans to slash energy bill support for businesses, leisure centres, schools and hospitals by 85%, and instead extend current levels of support for another six months.

Mr Carmichael said: 

“The Conservatives’ plan to hike energy bills in April will come as a hard hit to families in the isles who are already struggling with squeezed incomes, food prices and tax rises. With inflation still running north of ten percent that is a price hike few will be grateful for.

“Far too much of the support that has been given to families has been late in coming and confusing in the implementation. To cut off support even as households are still waiting for some delayed payments risks leaving people entirely in the dark. We need more certainty and a more thoughtful response from the government.”

Liberal Democrat Leader Ed Davey added:

“Rishi Sunak must act now to save families from a cost-of-living cliff edge, by cutting energy bills instead of increasing them. People deserve a fair deal – with a large cut to their energy bills, paid for by a proper windfall tax and a one-off levy on the bonuses of oil and gas bosses.”

ENDS

Notes to Editors: 

Household Plans:

  • Under the Government’s plans, the Energy Price Guarantee (EPG) will rise from £2,500 to £3,000 in April. This means that in the three months from April, the average household bill will rise by the equivalent of £500 a year.
  • From July 2023, Ofgem’s energy price cap is expected to fall below the level of the Energy Price Guarantee, to around £2,200, meaning that the EPG will no longer offer protection from high energy prices.
  • We estimate that under the Government’s plans, the average household bill over the 12 months from April will be £2,369. 
  • Under Liberal Democrat plans, the Energy Price Guarantee would be set at £1,971 for the 12 months from April. That is the same level as the April 2022 Ofgem energy price cap. Amending the EPG from its current £2,500 to £1,971 would cut the average energy bill by the equivalent of £529 a year over the three months from April.
  • Under Liberal Democrat plans, the average household bill over the 12 months from April would be £1,971. This is £398 lower than under the Government’s plan (see table 1).
  • The Liberal Democrats are also calling for an additional package of measures targeted at vulnerable households to help them save hundreds of pounds off their energy bills. This would include doubling the Warm Homes Discount and the Winter Fuel Allowance, as well as kickstarting a new home insulation scheme starting with fuel poor households.

Costings: 

The Liberal Democrat plan would mostly be funded through money already budgeted for energy support, but now unspent due to falling energy prices. Additional funds would be raised by a proper windfall tax on the record profits of oil and gas companies, including scrapping the fossil fuel investment loophole and raising the rate of the windfall tax from 35% to 40%. This could raise at least £15 billion more than the government’s current Energy Profits Levy.