"Energy Secretary Ed Miliband has suggested the government is considering cutting the 5% rate of VAT on household energy bills, as ministers prepare measures to tackle the deepening cost-of-living crisis ahead of next month's Budget. Speaking on the BBC's Sunday with Laura Kuenssberg, Mr Miliband refused to confirm whether a VAT cut was being actively pursued but acknowledged that households were struggling under high energy costs and that "all of these issues" were under review."
"Labour pledged ahead of the last general election to cut average energy bills by £300 a year by 2030, a commitment Mr Miliband insisted still stands. However, he argued that long-term price stability depends on accelerating the shift away from fossil fuels towards clean, domestically generated energy. "There is only one route to get bills down - clean, home-grown energy that we control, so we're not at the behest of petrol states and dictators," he said."
"Energy prices soared in 2021 following Russia's invasion of Ukraine and, despite falling from peak levels, remain historically high. Earlier this month, Ofgem increased its price cap by 2%, pushing a typical annual bill to £1,755, up £35 on the previous quarter. A Treasury spokesperson declined to comment on potential tax changes, stating only: "We do not comment on speculation.""
The government is reviewing a potential cut to the 5% VAT rate on domestic energy bills as part of measures to address the deepening cost-of-living crisis ahead of the November Budget. A VAT cut would save the average household around £86 annually and would cost the Treasury an estimated £2.5bn each year. Labour maintains a pledge to cut average energy bills by £300 a year by 2030 and emphasizes that long-term price stability requires accelerating the transition to clean, domestically generated energy. Ofgem recently increased the price cap by 2%, raising a typical annual bill to £1,755.
Read at Business Matters
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