Cameron announces ‘green tax rollback’ at PMQs

David Cameron made the announcement during Prime Minister's Questions. Picture: PA

The shock announcement by Mr Cameron came during Prime Minister’s Questions (PMQs) where for a third week running he was put under severe pressure by Labour leader Ed Miliband on the rising cost of energy bills.

It followed calls by former Tory Prime Minister Sir John Major for the government to impose a windfall tax on the back of rises imposed on customers by three of the big six energy companies of between 8.4 percent and 10.4 per cent with more expected to follow.

But the pledge by the Prime Minister to “roll back on green taxes” was met with a furious response from his Lib Dem coalition partners with Chief Treasury Secretary Danny Alexander saying that the agreed plan is to actually increase them instead.

He said: “We have made commitments on environmental levies as a Coalition, the Conservatives haven’t put forward any alternative proposals to us. But we as Liberal Democrats will support our commitment to the environment and don’t want jobs in Scotland and the rest of the UK which are supported by these environmental levies to be undermined.

He added: “There is no commitment to roll back environmental levies, quite the contrary, it is a very important part of our long term strategy to tackle climate change and the security of our energy supply.”

Mr Cameron made his remark following heavy criticism of environmental levies from the energy sector led by Scottish and Southern Energy (SSE) chief executive Alistair Phillips-Davies, whose company have put bills up by 8.4 per cent.

The last fortnight has also seen British Gas increase its bills by 9.2 per and NPower have announced rises of 10.4 per cent.

After PMQs Downing Street insisted that the Prime Minister’s remarks were Coalition policy but this was denied by Lib Dem ministers.

Challenged on Sir John’s remarks by Labour leader Ed Miliband during PMQs, Mr Cameron said: “I want more companies, I want better regulation, I want better deals for consumers. But yes, we also need to roll back the green charges that he put in place as energy secretary.”

As well as angering Mr Alexander, the Prime Minister’s comments also put him on collision course with Lib Dem Energy Secretary Ed Davey, who earlier this month said it would be “silly” to cut green levies which help low-income households install energy efficiency measures.

Mr Cameron said the former premier had been “absolutely right” however to say that energy bills had reached a “completely unacceptable level” and that action was needed.

Mr Miliband said Sir John had exposed the Prime Minister’s unwillingness to stand up to the energy companies.

“Many people face the choice this winter between heating and eating. These are the ordinary people of this country who this Prime Minister will never meet and whose lives he will never understand,” he said.

Mr Cameron also had the indignity of being reprimanded by Speaker John Bercow for describing Mr Miliband as a “con man” over his promise to freeze energy prices for 20 months if he wins the election in 2015.

Mr Miliband demanded that the coalition introduced the freeze now, but this was rejected by the Prime Minister.

Conservative MP and environmentalist Zac Goldsmith branded the party leaders “muppets” over energy.

The Richmond MP said on Twitter: “In 2010, leaders fought to prove they were the greenest. Three years on, they’re desperately blaming their own policies on the other. Muppets. People don’t trust politicians. Given this synthetic scrap between DC & EM on green taxes, is anyone surprised?”

Earlier in the day, Conservative former social security secretary Peter Lilley urged Mr Cameron to get tough with the big energy companies if it was shown they were using their monopoly powers to make excess profits.

“We have got to have a proper system that makes sure that the energy companies do not raise prices more than is justified by investment and rising costs,” Mr Lilley said.

While he rejected the idea of a windfall tax - warning it would simply add to the cost of energy - he said both Sir John and Mr Miliband, who is proposing a temporary price freeze, were right to try to address the issue.