We’re told energy bills are soaring – but how much of that fee is propping up government policy? writes Dean Dunham KC

It sounds obvious.

Yet what we pay on our energy bills doesn't all relate to the gas and electricity we've actually used. Our bills also include network costs, supplier costs, taxes and government policy costs.

And more than 120 businesses, charities and industry organisations are now calling on the Chancellor to remove policy costs from energy bills and fund them through general taxation instead.

They say doing so could knock around £250 a year off a typical household's energy costs.

With Ofgem's price cap rising to £1,723 from October for a typical dual-fuel household paying by Direct Debit, and forecasts pointing to another rise in January, this deserves serious attention.

These policy costs fund important things, including schemes supporting renewable energy and assistance for vulnerable households.

I'm not arguing that those things shouldn't be funded. I'm asking a much simpler question:

Why are we funding government policy through people's energy bills?

If the Government wants to spend billions pursuing energy, environmental or social policies, it should explain the cost to taxpayers and raise the money transparently.

That's what taxation is for.

Instead, consumers see an energy bill and naturally assume they're principally paying for the energy they've used and the infrastructure required to deliver it.

There is also a question of fairness.

Taxation can be structured around someone's ability to pay. Energy consumption can't.

A pensioner living in an old, poorly insulated house might need far more energy to stay warm than a wealthy household living in a modern, highly efficient property.

Yet putting policy costs on energy consumption potentially asks that pensioner to shoulder proportionately more of the burden simply because their home costs more to heat.

And let's be clear: moving these costs into taxation doesn't magically make £250 disappear.

We would still collectively pay for those policies.

But there is a fundamental difference: we would know we're paying for them and government would have to justify those costs openly rather than allowing them to disappear into one of the most complicated household bills consumers receive.

There's another interesting development this October. The Government is removing VAT from domestic electricity bills for six months, which is expected to save the average household around £45. Gas will continue to attract 5% VAT.

So we already know that taxation can have a direct impact on what consumers pay for energy.

This winter, that matters more than ever.

Energy prices remain substantially higher than they were before the energy crisis, and households are facing another increase from October, with a further rise currently forecast for January.

Consumers deserve to know exactly what they're paying for.

Businesses are increasingly being told that the price they advertise must be clear, transparent and include unavoidable charges. Government should live by the same principle.

If it's an energy cost, put it on my energy bill. If it's government policy, fund it openly and tell me what it costs.

Because putting public-policy costs into an essential household bill doesn't make them cheaper, it just makes them harder to see.

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Dean Dunham KC presents LBC's Consumer Hour every Sunday from 9pm-10pm.

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