Energy bills: How 5 European countries are limiting skyrocketing costs for citizens

The UK Government is being urged by opposition politician and industry representatives to act on this rising cost of living, but so far little has been done.

The energy price cap, set by Ofgem, is expected to go up by around £500 from April – with the cost of energy firms’ failures set to add a further £100 to consumers’ bill.

READ MORE: Five times Brexiteers promised the UK cheaper energy bills

At the same time a 1.25 percentage point increase in National Insurance contributions (NICs) comes into effect, while the Bank of England expects inflation rates to hit around 6% by the spring.

The Resolution Foundation think tank’s Torsten Bell has warned that 2022 looks set to be the “year of the squeeze”.

Meanwhile in mainland Europe, governments are taking action to limit the financial strain faced by their citizens.

Emma Pinchbeck, the chief executive of trade body Energy UK, is among those making urgent demands to prevent runaway household bills.

“It is looking pretty serious for the spring. This is a system-wide issue now. We are asking for the Treasury in the UK to intervene as others have [in Europe],” she said earlier this week.

So how are European countries stepping in to keep financial strain to a minimum? Here are the plans from five nations.

Norway

Norway’s prime minister Jonas Gahr Store has described the rocketing energy prices as an “extraordinary situation” requiring “extraordinary measures”.

He therefore announced an aid package of more than 8 billion kroner – approximately £673 million – to limit the impact on the country’s 5.4m citizens.

From December to March, the government will cover half of households’ electricity payments – with a market price higher than 70 ore per kw hour – through deductions on bills. There will be a consumption limit up to 5000 kw hours, however, and households will have to pay for usage beyond this.

Additionally, students are eligible for 3000 kroner (around £252) in extra loans if they can document their electricity expenses.

There will also be an electricity tax cut worth 2.9bn kroner (approximately £24m).

“It is a powerful response to what we know many people experience as an acute and difficult situation,” the prime minister told Norwegians.

The Netherlands

The Netherlands’s finance minister Wopke Hoekstra pledged to take “necessary action” to held consumers facing huge energy price increases back in October.

The government is now set to compensate households by cutting energy taxes by an average of 400 euros (around £336) per household from January 1.

Dutch ministers also put aside 150 million euros (approximately £126m) to improve home insulation. This cash will be distributed by local government through vouchers for smart energy metres and draught excluders.

Overall the measures announced are set to cost the Netherlands about 3.2bn euros (£2.6bn).

Italy

Italy’s government has confirmed an intervention worth 3.8bn euro (around £3.2bn) as consumers face energy bill increases of up to 50%.

Prime minister Mario Draghi said those rising costs for citizens led his government to decide to “eliminate for the last quarter of the year the system costs for gas for everyone, and for electricity for families and small companies”.

These “system costs” are additional charges on Italian energy bills, which cover overheads like renewable energy incentives and nuclear safety, and can make up around 20% of final bills.

Spain

Spain has already cut taxes on electricity bills to limit costs for consumers – and in December announced this would continue until May.

VAT on energy bills has been reduced from 21% to 10%, while energy minister Teresa Ribera confirmed that electricity tax will remain at just 0.5%.

The 7% electricity generation tax will be suspended until the end of March.

France

In October, French prime minister Jean Castex confirmed that those earning less than 2000 euros (£1680) a month would receive a 100 euro payment to help them cope with rising energy costs.

Some 38m people in the country are expected to benefit from this cash, Castex told journalists at the time.

The prime minister said tax cuts hadn’t worked previously to stem these kinds of rising prices, and preferred to target measures to those most in need.

A gas price cap announced in September would remain until the end of 2022 if needed, he added.

Back in the UK

In the UK, the Government is likely to continue facing calls to help households with skyrocketing prices as the cost of living crisis grows.

The SNP’s shadow energy spokesperson Alan Brown has been among those most vocal.

“This cost-of-living crisis falls directly at the door of No 10, therefore it is their responsibility to get a grip of this crisis,” he said.

“It is vital that Boris Johnson and Rishi Sunak follow the example set by numerous governments’ across Europe by reducing taxes on bills. By doing so, the Tories would be putting money back into customers pockets at a time when bills elsewhere continue to soar.

“And let’s not forget that while people across Scotland face enormous rises in their energy bills, the Treasury will be raking in substantial tax receipts from the inflated price of gas.

“There can be no more delays from the Tories. It is time to step up and perform their moral duty to families the length and breadth of the country.”

Meanwhile, shadow work and pensions secretary Jonathan Ashworth suggested Boris Johnson should take VAT off energy bills to cushion the impact on many families across the UK.

“In fact, you’re going to have families worse off, you’re going to have pensioners who are now facing the prospect of shivering in the cold or going without hot meals because of these rising (bills),” he added.