Ruth welcomes tax cut on energy bills

Ruth Cadbury, Member of Parliament for Brentford and Isleworth, has welcomed the news that the Prime Minister Andy Burnham has removed VAT on household electricity bills.  This Tax cut this year funded from cancelled Digital ID programme will see VAT on electricity bills removed from October.

In one of his first acts as Prime Minister Andy Burnham promised to “put more money in people’s pockets and bring back hope”. Households across the Boroughs of Hounslow and Richmond will benefit from immediate action to help

with their electricity bills this winter.

 The Government is tackling rising bills with a tax cut to remove VAT from domestic electricity bills from October 1 in time to impact the next Ofgem price cap. This immediate action applies and is funded for this financial year. The cost of this immediate action for this financial year – taken now, before the next price cap – is being funded from the cancellation of the (£1.8bn) Digital ID programme. All decisions at that point will continue to be funded and also consistent with the government’s fiscal rules. Cutting VAT on electricity bills is expected to take around £45 off the yearly Ofgem price cap in October. This is on top of the £150 removed from bills at the last Budget.  

By targeting electricity bills, more people will be supported with rising bills and the government is helping to keep inflation down.   All suppliers are expected to pass the VAT reduction on to all customers, including those on fixed tariffs, as they did with the £150 of costs taken off energy bills announced at the last Budget. Small businesses who qualify for the domestic energy VAT relief and are not registered for VAT, as well as charities and residential care homes eligible for the reduced rate will also benefit.  

Prime Minister Andy Burnham said: 

“Westminster has not been working for people for too long, with families struggling with the cost of living. 

That needs to change. I said I wanted to give people breathing space and that’s what I’m announcing on my second day as Prime Minister.

“We’re taking immediate action to cut taxes on energy bills, put more money in people’s pockets and bring back hope.”

 Ruth Cadbury MP for Brentford and Isleworth said:

 ‘‘The high cost of energy bills is continuing to put pressure of people’s finances across our constituency, so I welcome this decision to remove VAT from energy bills.

The war in Iran, which I opposed, caused the price of energy to spike and meant that many householders locally would have seen an increase in bills.  Higher energy costs hit the most vulnerable people hardest, such as those with disabilities or those with poorly insulated homes and I know from listening to people locally that rising prices were causing anxiety and worry.

Removing VAT will lower energy costs for these people and give much needed relief.

On top of this we need to continue our work to reduce our reliance on overseas fossil fuels and invest in clean and green energy such as nuclear, tidal and solar which supports jobs here in the UK and lowers bills.’’