The £4.3million-a-year Centrica boss today claimed household energy bills could be cut by £200 a year if Net Zero policy costs are funded through general taxation.
Chris O’Shea, chief executive of British Gas’s parent company, said it was unfair for everyone to pay for the costs of decarbonisation through their electricity bills.
The 52-year-old argued that funding the switchover via general taxation was ‘more progressive’, so ‘those with the broadest shoulders bear the biggest responsibility’.
Mr O’Shea added that such a policy – which he wants to see in tomorrow’s Budget – ‘would take about £200 out of people’s bills’, and he would be ‘happy to pay more’.
The wealthy Scot took home £4.3million in Centrica’s latest financial year, although this was down from £8.2million he received in 2023 and £4.49million for 2022.
Mr O’Shea’s most recent pay packet included a base salary of £845,000, £1.4million from an annual incentive plan and £2million from a long-term incentive plan.
He told Sky News today: ‘What we’ve argued for for many, many years is that the policy costs of decarbonisation which currently sit on energy bills should move to general taxation. That would take about £200 out of people’s bills.
‘And the reason for that is that general taxation is more progressive, so those with the broadest shoulders bear the biggest responsibility. Whereas on energy bills as they are at the moment, then everybody picks up the same.
Chris O’Shea, chief executive of British Gas’s parent company Centrica, on Sky News today
Chris O’Shea is asked by presenter Wilfred Frost whether he would be happy to pay more tax
‘Doesn’t matter whether you’re very rich or very poor, you pick up the same cost just now. If the Chancellor could do that, she could take just over 10 per cent off electricity bills.
‘That would put more money into people’s pockets. It would help people that are struggling. So we’ve called for that for a long time.’
He added that he also wanted to bring in a new social tariff so ‘those that can’t afford their gas and electricity will pay less, and those that can will pay a bit more’.
Asked by presenter Wilfred Frost whether he would be happy to pay more tax, Mr O’Shea replied: ‘I think that would apply to both of us, anybody here in the studio.
‘I think we are fortunate enough to have a well-paid job. I personally would be happy to pay more. I think that’s fairer. I believe in progressive taxation. That’s why we call for these costs to be put on general taxation.’
The Resolution Foundation think tank has called for a similar move, encouraging the Chancellor to take some policy costs off electricity bills and onto general taxation.
Its experts believe this would cut typical bills by around £160 a year, bring inflation down by 0.3 percentage points, and reduce the extent to which gas is cheaper than electricity.
Another think tank, the Institute for Government (IFG), has also called for the transfer of funding of government energy policies to general taxation.
The IFG pointed out that while such a move would reduce energy bills, it would result in higher taxes or lower spending elsewhere to make up the funding – but this would still benefit those struggling most with energy affordability.
This is because it sees the tax system as more progressive than energy bills, meaning lower income households would benefit from the change.
Earlier this month the RenewableUK trade association joined calls for the Chancellor to ‘move energy policy costs from electricity bills into general taxation to make electricity cheaper and accelerate the electrification of heat and transport’.
Chancellor Rachel Reeves leaves 11 Downing Street ahead of the Budget in October 2024
The Energy Crisis Commission, which brings together representatives from Energy UK, the Confederation of British Industry, Citizens Advice and National Energy Action, has called on the Government to tackle high electricity prices and boost insulation in the upcoming Budget.
The group also said ministers should consider shifting some policy costs away from energy bills and into general taxation or spread them more evenly between gas and electricity bills.
Earlier this month, Mr O’Shea claimed Labour’s Net Zero push could result in unaffordable energy prices and make the drive a ‘complete and utter failure’.
He urged the Government to strike a balance between green energy and affordable bills after Energy Secretary Ed Miliband’s policies were blamed for rising energy bills.
Electricity prices in the UK remain some of the highest in Europe after Russia’s invasion of Ukraine in 2022 sparked the energy crisis.
Household energy bills will rise again by 0.2 per cent from January 1 after Ofgem revealed last week that it would be increasing its next price cap.
The regulator said energy bills will go up by about 28p a month for the average dual-fuel household in England, Scotland and Wales.
For the average household paying by direct debit for gas and electricity, the overall bill will be £1,758 a year, up from the current £1,755.
Ofgem’s price cap sets a maximum rate per unit and standing charge that customers can be billed when they are not on a fixed tariff. It does not limit total bills because households still pay for the amount of energy they consume.