Conversations about the rising cost of living often circle back to one familiar place: energy bills.
Many families are struggling to stay afloat, so the debate about who should pay for the nation’s Net Zero ambitions has become louder than ever.
Stepping firmly into that debate, Centrica chief executive Chris O’Shea believes there’s a better and fairer way to handle things—and he’s calling for a major shake-up.
The Argument for Moving Costs Away From Bills
O’Shea, who leads British Gas’s parent company, suggests the solution lies in shifting the fees attached to decarbonisation from everyone’s electricity bills to general taxation.
His reasoning is simple: flat charges on household bills hit every citizen equally, regardless of income, which he argues is inherently unfair.
If these costs were instead paid through tax, he says, people earning more would naturally contribute a larger share.
Claiming Bills Could Drop by £200 a Year
In his conversation with Sky News, the 52-year-old executive said this switch could instantly shave around £200 off the average household’s annual energy bill.
He insisted this approach would be “more progressive,” because those with “the broadest shoulders” would contribute more.
He also stressed that lowering bills would give struggling homes much-needed breathing space, especially with electricity prices continuing to rise.
O’Shea’s Own Pay and Why He Still Supports Higher Taxation
Despite earning a substantial salary—£4.3million in Centrica’s latest financial year—O’Shea said he would personally be willing to pay more tax if it helped reduce energy costs for others.
His pay package included an £845,000 base salary, around £1.4million in annual incentives, and £2million from a long-term plan.
Even with such a figure, he maintained that progressive taxation remains the fairest route.
Calls for a Social Tariff for Low-Income Households
Alongside the tax argument, O’Shea also pushed for a social tariff that would ensure low-income households pay less for their gas and electricity.
Those who can comfortably afford energy, he said, should expect to contribute slightly more so the system can better support vulnerable customers.
Think Tanks Back the Proposal
The Resolution Foundation is on the same page.
The group has advised the Chancellor to adopt a similar approach, estimating that the move could save families about £160 per year and bring inflation down slightly.
Another influential voice, the Institute for Government, said that while taxes may rise elsewhere to compensate, lower-income households would still benefit overall because the tax system is fairer than flat energy charges.
Industry Leaders Pushing for Change
Earlier this month, RenewableUK also pressed the Government to take energy policy costs off electricity bills and fund them through general taxation instead.
The organisation argued that this would help accelerate the shift toward electric heating and transport by reducing current imbalances between electricity and gas pricing.
Warnings About the Net Zero Strategy
O’Shea recently expressed concern that Labour’s ambitious Net Zero plans could backfire if rising energy prices make the transition unaffordable for everyday people.
He urged ministers to strike a balance between environmental responsibility and financial reality, especially as Energy Secretary Ed Miliband’s policies face criticism for contributing to higher bills.
The Current Reality: Energy Prices Remain High
Energy prices in the UK continue to be among the highest in Europe—a lingering effect of the supply shock caused by Russia’s 2022 invasion of Ukraine.
With Ofgem announcing a slight increase to the price cap from January 1, households are expected to pay about £1,758 a year for typical gas and electricity usage.
The cap limits unit rates and standing charges but not overall consumption, meaning families still pay based on how much energy they use.
Growing Pressure on the Government
The Energy Crisis Commission—featuring Energy UK, Citizens Advice, the CBI and others—has urged the Government to use the upcoming Budget to reduce high electricity costs, boost home insulation, and reconsider how levies are spread across gas and electricity bills.
Many industry leaders believe the current system places too much of the financial burden on electricity, slowing the transition toward cleaner energy.
What’s next?
All eyes are now on the Budget, where the Chancellor will decide whether to adopt any of these proposed changes.
If the Government moves policy costs into general taxation or introduces a social tariff, households could see immediate relief.
But if ministers choose to keep the current structure, the debate over fairness, Net Zero funding, and rising energy prices is likely to intensify in the months ahead.
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