Axing green policies 'foolish'

There is a "continuing argument" raging in the Coalition Government over the merits of investing in a low-carbon economy, according to Business Secretary Vince Cable.

He told BBC Radio 4's Today programme: "It is a continuing argument in the coalition, because Liberal Democrats have been arguing that we need to maintain a long-term priority towards a less carbon-based and polluting economy, and we have to make the decisions associated with that."

Read: Energy minister says 'enough is enough' on wind farms

Business Secretary Vince Cable has said that calls for the Government to axe green policies in the hope of bringing down the price of energy are "short-sighted and foolish".

He was responding to a suggestion by the chief executive of energy firm SSE that Britain should consider "retreating from decarbonisation".

Mr Cable told BBC Radio 4's Today programme: "The rise in energy prices is due to a whole variety of things, by far the most important of which is what's happening in world energy markets.

"We've had over a period of years very rapidly rising demand in Asia, particularly in China, we've had restrictions on supply from countries like Iran."

He added: "If you are taking a long-term view about shifting the British economy on to a less polluting, less carbon-based system, we have to provide those [green] incentives."

Read: SSE chief: Price rise 'helpful' to start 'green debate'

The chief executive of SSE, who yesterday announced price rises of up to 10%, said the rise would be "helpful" if it focused the nation on the spending priorities and opened a debate on the "green agenda" he claims is driving up prices for consumers.

In an interview with the Daily Telegraph, he said:

"A price rise is never a good thing to do, but if it focuses everyone on to a debate about what we as a nation should be spending money on, then in one way it will be helpful.

"We need to think about what people really want to pay for; maybe it's time to retreat from decarbonisation and focus more on the cost of living. I think we have to have a debate about it.

"Do we want to be replacing one bit of (energy) generation that we can keep going for a bit longer with a new bit of generation that's going to cost more?"

"I doubt the public like price increases of this magnitude, but if we carry on firmly behind the green agenda we will continue to have price increases like this."

Read: Energy suppliers refuse to rule out price hikes

The 8.2% rise in SSE bills is "disappointing" but "for the company to justify", an energy minister has said.

Conservative Michael Fallon hoped "customers would look very carefully" at tariffs and think of switching if bills became unmanageable.

However, he hinted there would be no Government intervention and instead wanted to create more competition under the 2013 Energy Bill, which is already making its way through Parliament.

SSE, which has around 10 million customer accounts, blamed the increased cost of buying and delivering wholesale energy as well as Government levies collected through bills.

It said the latest increase, which is three times the rate of inflation, would come into effect from November 15.

The company, which trades as Southern Electric, Swalec and Scottish Hydro, said the hike equated to an average £2 a week for a typical dual fuel customer.

Will Morris, SSE retail managing director, said the firm was "sorry" to have to raise its prices: