By Vivienne Russell | 17 February 2014
Parliament should be given greater opportunity to scrutinise the funds raised and spent on green energy schemes through levies on electricity and gas bills, MPs said today.
The Levy Control Framework, which was established by the Department of Energy and Climate Change and the Treasury in 2011, caps the amount energy companies can recover from consumers to fund green energy schemes. These include the Renewables Obligation and the Warm Homes Discount.
The cap is set to rise from £3.2bn in the current financial year to £7.6bn by 2020/21.
There have, however, been issues over how LCF spending is accounted for. The National Audit Office has taken the view that including LCF revenues within end year Departmental Accounts, which report on all spending authorised by its Supplementary Estimates, would be inconsistent with International Financial Reporting Standards and was likely to lead to delays or qualifications.
Since 2011/12, Decc has obtained a derogation from the Treasury to exclude LCF revenues from Supplementary Estimates and, consequently, its Departmental Accounts.
Chief Secretary to the Treasury Danny Alexander has instead proposed that audited reports on LCF revenues are presented to Parliament separately.
But MPs today urged the government to go further and said Parliament must have adequate oversight of how these funds are raised and spent, ‘particularly in the light of public concern over the cost of energy bills’.
They said: ‘We consider that the effective spending and taxation proposed should be subject to some level of Parliamentary authority before it arises.
‘While we understand the difficulties that including the items with Estimates could cause for the Departmental Accounts, we believe it would be highly desirable that there should be a means for Parliament to express its views from time to time on the sums involved and the purposes for which they are intended, despite the fact that no monies are actually issued from, or surrendered to, the Consolidated Fund. The government should look further into how this might be achieved.’
The committee also said a single annual report covering all of Decc’s levy-funded schemes should be prepared. This should include comparisons of agreed budgets and final spend, ‘costs per customer’ for each scheme and details of the outcomes achieved through spending.
