Taxpayers’ Alliance ‘made dodgy claims on energy bills’

Ed Davey says 'The new energy policy will account for 17 per cent of the increase in electricity unit prices, which will not affect household bills' (PA)

The Energy Secretary Ed Davey has attacked the Taxpayers’ Alliance – accusing the campaign group of making “dodgy, back-of-fag-packet claims” about energy bills.

The Liberal Democrat minister hit out after the low-tax pressure group published figures claiming that household energy bills could reach £2,000 per household by the end of the decade – with green charges and subsequent VAT increasing prices by 29 per cent.

Its analysis was based on calculations from the investment bank Liberum Capital which predicted the rise in green energy taxes will mean average electricity bills reach £812 by 2020. The TaxPayers’ Alliance estimated gas bills could also rise by 29 per cent, using the forecasts to launch a campaign calling for an end to wind turbine subsidies.

But the figures have been disputed by Mr Davey, who has written to the Taxpayers’ Alliance to express his anger. The letter, seen by The Independent, says: “Your calculations are wrong and there is no good foundation to your claim that by 2020 green charges and tax will account for £620 of average energy bills. It is disingenuous to seek to pin the blame on government policies using inflated assessments of their impacts while ignoring the main driver for price increases – rising global fossil fuel prices.”

Mr Davey goes on to claim that Liberium “does not appear to have undertaken the detailed modelling of the electricity market required accurately to estimate the impact on prices and bills.” In addition, the ministers says there is no justification for assuming the 29 per cent increase in electricity prices would also apply to gas.

Mr Davey told The Independent: “Energy bills are too serious an issue for consumers to be misled with dodgy, back-of-fag-packet claims.”

The Department of Energy and Climate Change insists that spending on green energy will be offset by savings for customers, making bills around £166 cheaper in the long run.

Last night The Taxpayers’ Alliance’s chief executive Matthew Sinclair said: “The Liberum estimate of the investment needed seems very reasonable, particularly given the problems facing the nuclear programme and the Government missing their target to reduce the cost of offshore wind. It is very worrying that the Government is premising its policies on rising gas prices.”

Taxing questions: What they said

Taxpayers Alliance, led by Matthew Sinclair, says….

Electricity bills will rise by 29 per cent between now and 2020

Ed Davey says…

The new energy policy will account for 17 per cent of the increase in electricity unit prices, which will not affect household bills.

Taxpayers Alliance says…

A similar 29 per cent increase on gas bills, which it claims will rise to £1,070, making a total average energy bill almost £1,900.

Ed Davey says…

The policy impact on gas prices is currently much lower than electricity. It accounts for just 5 per cent of the gas retail price, and this is not currently expected to rise through to 2020.