Government confirms windfall tax hike on low-carbon electricity generators

Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “For too long, households and businesses have been paying electricity bills linked to and inflated by a gas market they have no control over. This is a structural failure in how our energy system is priced and it has cost households dearly. Raising the levy on generators that pocket windfall profits when bills soar is the right thing to do.

“The carrot and stick approach where energy firms are incentivised to lower prices by moving to new contracts, or face higher taxes, is a sensible one. If these new contracts are properly designed and genuinely deliver for consumers, it could lower prices overall. The critical test is whether households, particularly those least able to pay, actually see the benefit on their bills and by when.

“The Government is right to act, but these measures must be the beginning and not the end of reform. Millions of households are still struggling with bills that are around 90% higher than before the energy crisis. Any revenue raised from the levy increase must be used to support those most exposed to fuel poverty and Ministers must not lose sight of the need for a wider overhaul of how electricity is priced in this country.”