Thank you, Mr Speaker.
First, the Government will provide £300 million in both 2014 and 2015, £600 million in all, for a new rebate to all domestic electricity customers worth £12. Secondly, we propose to consult on remodelling the ECO so that it is easier and cheaper to deliver. The changes to the ECO would result in between £30 and £35 off average bills next year, although the precise reduction in individual households’ bills would depend on their energy supplier. The existing dedicated support in the ECO for low-income and vulnerable households—affordable warmth and the carbon saving communities obligations—will both be maintained at current levels and extended from March 2015 until March 2017. The other element of the ECO, the carbon emissions reduction obligation, will also be extended by two years but reduced by 33%. These changes are subject to consultation, which will be carried out early in the new year. In addition to Government action, the electricity distribution network operators are willing to take voluntary action to reduce network costs in 2014-15, which would enable suppliers to pass on an average one-off £5 reduction in domestic electricity bills.
I have been clear from the start that support for low-carbon energy should not change, and it will not. The Government recognise that green energy investment incentives such as the renewables obligation, contracts for difference and feed-in tariffs are essential for investment in future home-grown clean energy generation. Without this low-carbon investment, energy security would be jeopardised as Britain would become ever more dependent on imported oil and gas, and energy bills in the future would be increasingly subject to high and volatile fossil fuel prices. The Government will also ensure that their overall approach will cut just as much carbon as planned. New measures, worth more than £540 million over three years, will boost energy efficiency even further by introducing new schemes for home-movers, landlords and public sector buildings.
In future, when people buy a new home, they could get up to £1,000 from the Government to spend on important energy-saving measures—equivalent to half the stamp duty on the average house—or up to £4,000
for particularly expensive measures. The scheme will be available to all people moving house, including those who do not pay stamp duty, helping around 60,000 homes a year over three years. The Government will also introduce a scheme to support private landlords in improving the energy efficiency of their properties, which will improve some 15,000 of the least energy-efficient rental properties each year for three years. Together, the home buyers and private rental schemes will be worth £450 million over three years. In addition, £90 million over three years will be spent on improving the energy efficiency of schools, hospitals and other public sector buildings.
The Government will deliver a significant boost to the green deal, increasing the funds available to local authorities this year through the green deal communities scheme from £20 million to £80 million, to help support “street-by-street” programmes for hard-to-treat homes in a cost-effective way. We will keep the green deal cashback scheme open, which will protect jobs in the energy efficiency industry before the new measures take effect.
All the major energy suppliers have confirmed that they will pass the benefits of this package on to their customers. The reduction in individual household bills will depend on the energy supplier: some companies have not yet announced price rises for 2014, or have limited their rise until the Government’s review of green levies concluded. Others have announced price rises and have indicated that they will reduce their customers’ bills as a result of these changes. Energy companies will now make final detailed decisions about how to apply these measures, but these cost reductions will ensure that average energy bills are lower in 2014 than they otherwise would have been—on average, by £50 per household. As the major energy companies have now confirmed, there will be no need for price rises in 2014, unless of course there is a major change in wholesale or network costs. Some have gone further, with commitments to hold prices down for longer.
Today’s announcement of cuts to energy bills is just part of the concerted action the Government are taking to help hard-working families, including through income tax cuts, the council tax freeze and the fuel duty freeze. This help for people with energy bills is being achieved while we maintain and extend support for the fuel-poor and continue to back green energy, and by boosting energy efficiency. I commend this statement to the House.
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