Energy firms 'avoiding tax'

Labour's shadow chief secretary to the Treasury, Chris Leslie, said David Cameron needs to explain why he decided not to close down the tax loophole "which we now know some energy companies are using to avoid millions in tax."

Read: Danny Alexander: I'm livid about tax avoidance

Shadow energy secretary Caroline Flint has branded the Energy Companies Obligation (ECO) "expensive and bureaucratic" and said the programme does not help fuel poverty.

Speaking on Sunday Politics, Ms Flint said: "What we do believe is that the ECO scheme, which is a Government invention and which is £47 of the £112 on our bills each year, is expensive, it's bureaucratic and it's not going to the fuel-poor.

"I'm up for a debate on these issues and I'm also open to discussion about what Government should do and what these energy companies should do.

"We can't let Cameron or the energy companies - who seem to to be backing this idea - off the hook about the way in which they organise their businesses and expect us to pay ever-increasing rises in our bills."

Read: How ECO fits into the Tories' energy plan

Chief Secretary to the Treasury Danny Alexander told BBC1's Andrew Marr Show he is "livid" about energy firms that avoid tax and said everyone needs to pay their "fair share".

Gas distribution firm Scotia Gas, UK Power Networks and Electricity Northwest have avoided paying a total of £140 million in tax by racking up interest on debt from their owners, according to a report by The Independent on Sunday.

Tax bills are reduced by a legal procedure that sees the firms' owners lend it money through the Channel Islands Stock Exchange rather than investing it in shares. Scotia Gas avoided paying £72.5 million and UK Power Networks saved £38 million and Electricity Northwest £30 million by similar deals.

Scotia Gas and Electricity Northwest declined to comment on the allegations, while UK Power Networks told the Press Association that it "fully complies with all applicable regulatory, tax and legal requirements relevant to a group operating in the UK".

Labour leader Ed Miliband has accused Prime Minster David Cameron of failing to take action against big energy companies that avoid tax.

A whistleblower at British Gas has claimed the energy giant boosts its own profits by using millions of pounds of credit built up by former customers.

The provider has taken £20m from customers with outstanding credit over the past year, the unnamed whistleblower told The Observer.

The credit - built up when customers use less energy than they are originally billed for - was taken by British Gas when private and business users were overcharged on initial estimates and then switched to another supplier, with outstanding money still owed to them.

The whistleblower claims British Gas established a special team to speed up what is a legal, but widely frowned upon, transfer of funds.

British Gas said it makes "every effort" to track down former customers to return money to them, but said it is unable to locate all those who have left.

The Survation poll found that more people blame the energy companies (59%) than either the current government (15%) or the previous Labour administration (15%) for the spiralling cost of gas and electricity.

The poll came as energy minister Greg Barker promised to "come down like a ton of bricks" on energy companies which are stockpiling cash from customers' direct debits.

Unless customers ask for the money back, energy companies are able to hold on to sums from monthly payments in excess of the amount owed for power used, and are able to earn interest on the money while it is sitting in their accounts.

Read: Majority 'oppose green levies'

A large majority of consumers oppose green levies on energy bills and back Prime Minister David Cameron's plans to "roll them back", according to a new poll.

The survey found almost three-quarters (72%) believe energy prices will affect the way they vote in the general election.

More (40%) back Mr Cameron's approach to the issue than those of Labour leader Ed Miliband, who is promising a price freeze (33%) or Liberal Democrat Deputy Prime Minister Nick Clegg, who has indicated he will fight to protect the green levies (7%), the Survation poll found in Mail on Sunday.

Ed Miliband switched his energy supplier to one of the "minnows" challenging the Big Six providers after being stung by a bill for £1,000.

The Labour leader told the Mail on Sunday that he and wife Justine decided to switch from E.On to First Utility.

Asked how much they had saved, he said: "We don't know yet. We had a huge big bill for last winter - as much as a thousand pounds."

Mr Miliband has put energy prices at the heart of his assault on the coalition Government, pledging a 20-month freeze if he comes to power.