Labor calls for another 5% VAT reduction on energy bills

Image source, House of Commons

Angela Rayner, Labour’s deputy leader, questioned Boris Johnson during PMQs

Labour called on the government to scrap the 5% VAT rate for energy bills, demanding that there be “serious solutions for rising living costs.”

Angela Rayner, deputy leader of the party, said that working families are “paying the bill” for Boris Johnson’s incompetence over this issue.

However, the PM insisted that government provided a range of assistance programs.

In the UK, energy prices have risen due to an increase in wholesale gas costs.

As the energy price cap, which limits how much customers can charge for energy, saw many businesses being forced to sell their energy at a lower cost than what they purchased it. 27 other energy companies also went bust.

There are concerns that an April increase in the cap could lead to households being hit with higher bills.

  • What can government do to solve the energy crisis
  • Peers and Tory MPs urge PM to take action on energy bills
  • Why is gas so expensive?

Labour is calling on the government to reduce the 5% VAT rate for energy bills from October to zero. Shadow chancellor Rachel Reeves called it an “immediate” and “simple”, to assist people with the winter cost burden.

Last week, 20 Conservative MPs joined with their peers and colleagues, five of whom were ex-ministers.

In 2016, Johnson wrote in The Sun that he supported the removal of VAT from energy bills. He claimed it was a benefit to Brexit.

Backers of the plan said VAT receipts had come in more than £3bn higher than forecast because of rising prices, giving the government extra funds to cover the cost.

A Treasury source said to BBC that the BBC is correct in stating that the rise of bills means consumers spend less on items with higher VAT. Therefore, the total income for the government remains flat.

‘Political choices’

In the absence of Sir Keir Starmer, Labour leader – who was positive for Covid testing – Ms Rayner stated that “working people all over the country are faced with rising prices and rising bills” due to rising energy costs, inflation and an upcoming tax increase to fund the NHS and other social services.

She said, “The prime minister made the political decisions that led us to this point.”

The deputy leader said that the government “failed in long-term energy security investments” and had “let the market out of control”. He added: “Can the prime minister not see what’s happening?”

“Yet another time, working families pick up the tab for his incompetence.”

After quoting his Sun article promising the cut in VAT, Ms Rayner stated that “any decent government” would find a way “to help British families”. She asked him to “finally stand by his chancellor” so that he could secure the change.

Johnson claimed that there were many government policies, such as the winter fuel payment and warm home discount, which are meant to support low-income people.

Labour was also accused of having “bare-faced cheek,” calling for the VAT reduction. Labour campaigned for staying in the EU, when that would have not been possible.

It would be impossible for anyone to do the Labour thing and get back in the EU. [and]The PM stated that they would remain “aligned with the EU single markets.”

That is the Labour Party’s objective. They cannot be trusted in Brexit negotiations and the economy.

‘Tory squeeze’

Ian Blackford (SNP leader in Westminster) also hit out at the prime minister for the increasing cost of living. He said: “We had the Year of Tory Sleaze. But now we have the Year of Tory Squeeze for Family Budgets.”

He quoted research from the Resolution Foundation, saying on average families will be £1,200 worse off from April “as a result of Tory cuts, tax hikes and soaring energy bills”.

Blackford asked for the Prime Minister to make an “emergency financial package” in order to assist the most vulnerable.

Johnson claimed that the government is “helping families across the country”, and pointed to improvements to Universal Credit and an increase in the living wage.

He stated, “You have now more people employed than you had before the pandemic.”

We have a balanced approach to balancing and proportionate approaches that has led to this.


Share Your Comment Below



Please enter your comment!
Please enter your name here