Green levies are a form of defence spending to ease Russia’s hold on our energy market
SINCE Boris Johnson announced he would resign, the Conservative party split itself into different camps for their leader. Now we have the final two: Rishi Sunak and Liz Truss. After an ideologically-light leader, the party has tried to reshape itself over its policy on tax cuts and the cost of living. On the one hand, we have the former chancellor putting fiscal prudence at the heart of his plans, on the other, we have the foreign secretary vowing tens of billions of pounds in tax cuts to appeal to a “Thatcherite” legacy.
The UK had a pressure cooker heatwave this week and wildfires have raged across Europe. Yet, in place of environmental pledges, there are suggestions green levies could be removed as a means to tackle the cost of living.
This is the definition of short-termism. It would weaken the net zero promise with minimal effect on cost of living.
The green levy is a charge added to energy bills in order to help pay for government energy policy and the transition to net zero. The money goes towards energy efficiency improvements in homes and businesses, helping vulnerable people and encouraging take-up of renewable technology.
There have been claims that the levy is artificially raising energy bills but, currently, it accounts for only £153 of the average £1,971 energy bill, roughly 8 per cent. With the price gap expected to rise by another £800 in October, this percentage will fall even lower.
The driving force behind energy bill increases is the wholesale price of gas, which now accounts for over 50 per cent of the total cost of a typical bill. Removing the levy will have no effect on the main drivers of price increases and, at best, will result in minimal reductions on bills.
The green levy powers our ability to invest in renewable energy generation. Scrapping it would, in fact, weaken our hand against Russia as we deplete the capital we have to loosen their grip on our energy bills by separating ourselves from the whims of international energy markets.
It’s worth saying: £153 over the course of a year is not nothing for families struggling to make ends meet. But it will quickly be eaten up by further rises to the price cap.
In truth, the green levy is a critical part of defence policy. Many candidates pledging further increases to defence spending should recognise this. Lowering investment into renewable infrastructure strengthens Russia’s hold on international energy and is counterproductive to our aims at stopping the invasion of Ukraine.
Leadership candidates have taken hawkish positions on Russia with defence spending and military connections playing a key part in some campaigns thus far. But increasing defence spending and toughening our stance on Russia while simultaneously taking aim at net zero policies is short-sighted and leaves open a key vulnerability.
The green levy will allow the UK to continue to invest into its energy security, reducing our reliance on foreign powers and providing an economically sound method for reducing the cost of living over the next decade. Cuts and targets on renewable and environmental investment will only prolong the cost of living crisis, extend the UK’s reliance on fuel imports and weaken our position in future negotiations with Russia.