Labour's plan to keep your energy bills down

Soaring energy prices are set to push a quarter of households into fuel poverty this winter.

I’m already seeing the impact in my inbox and at my constituency surgeries.  Residents telling me they’re struggling to afford the essentials or worried about putting their heating on because they don’t know how they’re going to pay the bill. Many have asked me why won’t the government simply back Labour’s plan and cut VAT on our domestic energy supply, as so many Tory Ministers pledged to do during the Brexit referendum campaign.

In 2016, Michael Gove and Boris Johnson wrote an article in the Sun where they promised that if we voted to leave the EU, fuel bills would “be lower for everyone”. They wrote: “In 1993, VAT on household energy bills was imposed. This makes gas and electricity much more expensive… when we Vote Leave, we will be able to scrap this unfair and damaging tax.”. Cut to 2022 with the UK facing a cost of living crisis and a 54% increase in gas and energy costs from April 2022, the government has broken this promise.

On 11 January 2022, Labour scheduled an Opposition day debate to call for the Government to cut the rate of VAT for household energy bills as soon as possible. We believe this is one of the easiest things that the government could do to help households with mounting bills. This VAT cut on domestic energy bills would change the charge from 5% to zero and would come into place from 1st November. It would see people through the most difficult winter months and would be automatically deducted from bills. Overall, this would provide immediate relief to the budgets of 28m UK households.

I believe it is wrong that the government has performed a U-turn on yet another of its Brexit promises and is leaving struggling families to pay the price. Whilst our energy prices will rise by 54% from April, here is what the rest of the EU is doing:

  • Belgium has now cut VAT on its energy prices whilst remaining an EU Member State
  • Bulgaria has frozen regulated electricity and heating prices until the end of March to shield households
  • In the Czech Republic, the Czech parliament’s lower chamber approved a government bill easing conditions for social benefits connected to housing, which should help those hardest-hit by the energy price surge
  • France has committed to capping an increase on regulated electricity costs at 4%
  • The German government said it may scrap this year a surcharge on electricity bills used to support renewable power
  • Greece has announced a 2% increase in the minimum wage and will cut property tax rates by a further 13% to help households struggling with rising inflation and higher energy costs
  • The Netherlands has cut energy taxes for its 8 million households
  • Norway subsidised household electricity bills in December, paying 55% of the portion of power bills above a certain rate, which it increased to 80% for January-March
  • Poland has announced tax cuts on energy, petrol and basic food items, as well as cash handouts for households
  • Spain cut several taxes to try to reduce consumer bills, originally planning to maintain the lower rates until the end of 2021, but decided in December to keep them lower until May 2022

I have also submitted the following Written Parliamentary Question: To ask the Secretary of State for Business, Energy and Industrial Strategy, will he explain why his department will not cut VAT on domestic energy bills

Instead of sitting back and leaving people worse off, Labour would get a grip on the crisis and improve people’s everyday lives. We would cut VAT on domestic energy bills for six months, stop the National Insurance increase that will hit businesses and working people hard grow skills in the long term, and get our roads moving in the short term so that our supply chains recover. The government are learning that it is not enough to Get Brexit Done – you need a plan to Make Brexit Work, and Labour will do that by plugging gaps in the deal and cutting red tape.

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