Money raised from carbon taxes on energy bills should be used to lift millions of UK house-holds out of fuel poverty and boost the economy, it has been suggested.
The Treasury will receive billions of pounds a year from 2013 as energy companies are made to pay for carbon emissions, and the cost on energy bills will be viewed as a stealth tax unless it is spent helping consumers, ministers were warned.
Analysis for Consumer Focus estimates £63 billion (€79 billion) will be raised in revenues between 2013 and 2027 by making energy firms pay for the carbon they emit, rising from £2.7 billion (€3.4 billion) next year to £6.8 billion a year in 15 years’ time.
The report estimates that households will be paying £21 a year next year, with the cost of green policies rising to £39 by 2020.
But rising energy bills, mostly driven by increasing gas prices, will see the number of households in fuel poverty – spending more than 10 per cent of their income on heating their homes – grow from six million to more than nine million by 2016.