Miatta Fahnbulleh raises tax funding for green energy costs as bill review begins

UK Energy Secretary Miatta Fahnbulleh says ministers must examine whether more of the cost of green energy infrastructure should be paid through general taxation instead of household bills. Her comments open a question about who pays for the transition, but she has announced neither a transfer of levies nor a saving for customers.

Speaking to the Guardian’s Politics Weekly podcast, Fahnbulleh said the government needed to consider how fixed costs are recovered if it wants a resilient energy system. She framed the choice as one between the Exchequer and billpayers, as well as a question of how costs are shared among customers. The Guardian reported that options under consideration include varying levies between customers or funding them through taxation.

What could change on bills

Green and social levies are among the charges collected through energy bills to fund policies including renewable energy and support for households. Shifting a levy to general taxation could reduce the amount shown on a bill, while leaving the underlying programme to be paid for through public funds. The Guardian reported that paying for schemes such as windfarms, solar panels and home insulation this way would mean either higher taxes or cuts elsewhere.

The Guardian cited an estimate that moving levies could cut average customer bills by about £120 a year while costing the Treasury a little over £3bn annually. Those figures are estimates discussed in reporting on the options, not a government costing or an announced offer to households. The amount any household might save would depend on which levies were moved and how the government financed the change.

What research says about who pays

The MCS Foundation, a green energy charity, has argued that collecting social and environmental levies through electricity bills places a disproportionate burden on lower-income households. In its March analysis, it said some such households paid more than four times as much of their net income on electricity levies as better-off groups. That finding describes the existing system; it is not a measured result of a reform.

For the levies examined in its proposal, the Foundation estimated that moving costs into general taxation could lower annual household energy bills by £170 to £530. It put the estimated saving for its low-income household examples at £193 to £360. Those ranges concern the Foundation’s model and should not be read as the saving from a policy Fahnbulleh has chosen: the government has not specified which charges, if any, it would move.

The Foundation also estimated that its proposed shift could lift nearly 900,000 households out of fuel poverty and allow more than 5.8 million households to save at least £300 a year on bills. These are projections under that proposal, rather than observed effects or government commitments. Garry Felgate, the Foundation’s chief executive, said levies had been introduced to fund measures for fuel-poor homes and renewable infrastructure, but argued that their current placement works against those aims.

Pressure for a wider shift

The debate predates Fahnbulleh’s comments. The Foundation said the 2025 Autumn Budget moved 75% of the cost of the Renewables Obligation from household levies to Treasury funding until 2029. It described that measure as a temporary, partial step and called for wider reform. Its account shows that a transfer of some costs is already part of the funding approach, though it does not establish what ministers will do next.

Earlier in September, the Guardian reported that 123 organisations had backed a letter asking the chancellor to move policy levies off bills. They included Energy UK, the CBI, End Fuel Poverty and Age UK. The signatories argued that their preferred changes could lower the average household bill by as much as £250 a year, including an estimated £150 from previously announced measures. Their figure is a campaign claim, not a verified saving from a new decision.

Fahnbulleh has yet to give a timetable, identify the levies a review might cover or explain how any extra Treasury spending would be funded. Until those choices are set out, the effect on bills and taxpayers cannot be calculated from her comments alone. The immediate development is that the energy secretary has put the division of costs between bills and taxation under consideration as she seeks to bring bills down.