Green taxes
"Green" taxes – designed to protect the environment by cutting consumption of gas, electricity, petrol and other natural resources – are liable to hit the poorest homes hardest, it has been claimed.
But their negative impact on low-income households can be substantially reduced through carefully designed charging regimes or compensation schemes, according to research launched on Wednesday by the Joseph Rowntree Foundation.
Stakeholder Response: Joseph Rowntree Foundation
Professor Ekins, head of the environment group at PSI and co-author of the report, said: "The results from this research can help policy makers ensure that, if environmental taxes and charges are introduced, they are designed in ways that prevent unintended consequences for people who live on low incomes.
"Our research demonstrates that, in general, it is possible to solve the disproportionate impact on poorer households sometimes associated with environmental taxes and charges.
"In theory, any broad but practicable compensation scheme will still create net losers among low-income households as well as a majority who gain.
"But in practice, households will also have the option of responding to the new tax or charge by cutting their consumption of the resource being taxed, further reducing the number of net losers.
"Further targeted compensation measures should be able to prevent unacceptable hardship among those who remain."
Stakeholder Response: Energy Retail Association
Russell Hamblin-Boone head of communications and policy at the ERA, said: "Energy suppliers support the view that vulnerable customers are at most risk from increased taxes. The industry makes every effort to help those who have problems paying their bills.
"Suppliers offer a range a range of payment options, special services, tariffs and advice.
"For example two companies British Gas and EDF Energy have set up trust funds for their customers and Powergen has a special tariff for vulnerable customers.
"Energy efficiency is a key factor in supporting the fuel poor; although it is not a panacea to all the problems they face.
"Through the energy efficiency commitment suppliers have insulated thousands of homes in the social housing sector.
"However, we need to be more effective at communicating the range of schemes that suppliers currently operate to support those in fuel poverty.
"The best way to help our customers is to encourage a dialogue with them. This is something that we are currently working on as a collective industry initiative.
"We also believe that the government can help us with this. People in fuel poverty often have multiple debt and we need to join up the services that offer help to addresses all of the problems vulnerable people face.
"The government has access to information about those people that could be used to target help and advice.
"We need to understand where vulnerable customers currently get public information and tap into those channels.
"We need to engage local community services, such as doctors, chemists, benefits offices, citizens advice bureaux to act as a link between suppliers and those in fuel poverty.
"The report suggests that those in fuel poor need compensation.
"The government runs a scheme in which customers receiving certain state benefits, such as income support, may be eligible to join the Fuel Direct scheme, which provides 'direct payments for fuel' through the Benefits Agency.
"The system is already in place and if the qualifying criteria for this scheme was extended more people would be entitled to receive help paying their bills."
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