Budget: Octopus boss Greg Jackson hails cuts to energy bills
Octopus Energy boss Greg Jackson has hailed the cuts to energy bills announced in today’s Budget, as the Chancellor slashed multiple renewable levies.
Jackson welcomed the energy bill cuts as a “positive step” as Rachel Reeves described energy costs as “one of the greatest drivers of the rising cost of living”.
Reeves said she will scrap the Energy Company Obligation (ECO) scheme, a levy which forced suppliers to contribute to energy efficiency improvements like insulation.
The Chancellor also announced she will cut the renewable obligations scheme – a green levy on electricity bills – by 75 per cent.
This levy is a subsidy for renewable electricity generation, charged to suppliers but fully passed onto consumer bills.
The government will now refund 75 per cent of this subsidy, leaving 25 per cent to be passed onto domestic electricity bills.
This will cost the Treasury £2.3bn per year until it lapses in 2029-30, when the subsidy will be restored to 100 per cent, according to the OBR’s forecast.
Reeves said her Budget will cut £150 from the average household energy bill from April next year.
Scrapped levy delivered ‘meagre savings’
Jackson said: “This cut in electricity bills is a positive step in the right direction for customers. Making electricity cheaper is also crucial for people adopting electric heating and electric vehicles.
“The ECO scheme had become simply too wasteful, adding high costs to everyone’s bills and only delivering meagre savings for recipients. A reset through the Warm Homes Plan is the right approach.”
Labour had been under pressure to tackle soaring energy costs, and 60 energy groups have called on the government to cut green levies.
The decision to target electricity is likely to be welcomed by the green energy sector as a measure to incentivise consumers to move to low-carbon sources.
Energy bills continue to rise, with the price cap having risen to £1,755 for the final quarter of this year, over £600 higher than when it was introduced in 2019.
Labour has made tackling energy costs a key mission but it has faced criticism from the Tories and Reform UK that its investment in green energy is driving up household bills.
Speaking at the dispatch box, Rachel Reeves described ECO – launched by a Conservative government – as a “failed scheme”.
She said: “Money off bills, and in the pockets of working people. That is my choice. Not to neglect Britain’s energy security, like the Tories did.”
Trade association Energy UK hailed the cuts to energy bills but urged the Government to deliver on efforts to make homes more energy efficient and allow Brits to save on energy bills.
Chief executive Dhara Vyas said: “We warmly welcome the announcement today from the Chancellor, which will give customers some respite from the high energy costs that far too many households have struggled with over recent years.
“It’s crucial that the Government delivers on the promise of the Warm Homes Plan. The proposal to cut the ECO programme significantly reduces the overall funding available for vital home improvements that would lower bills.”
Professor John Underhill, an energy security expert at the University of Aberdeen, welcomed the cuts to levies, saying this will do more to reduce energy bills than cutting VAT – another measure which had been rumoured ahead of the Budget.
“It is an understandable move to refund the renewable obligations scheme to address the cost of living crisis.”