Stephen Gethins, the Scottish Government's energy minister, has warned that the £850 million tax cut on electricity bills announced by Prime Minister Andy Burnham could be "quickly eroded" if costs rise again in the autumn.
The move, which will make electricity bills VAT-free from October 1, is part of the Labour leader's efforts to tackle cost-of-living pressures. It will save households about £45 a year, with the cost funded in part by scrapping Sir Keir Starmer's digital ID project.
Welcome but cautious response
The announcement has been welcomed by the Scottish Government and consumer organisations, but they have called for further action. Citizens Advice Scotland (CAS) stressed it was "long past time to rewire the energy system so that everyone can afford to keep the lights on and their homes warm."
Scottish Secretary Douglas Alexander said: "Andy Burnham has been clear that from the off that he will put more money in people's pockets and give people breathing space from the cost of living. His decision to cut VAT from household electricity bills will be great news for families up and down Scotland, giving much-needed reassurance on bills this winter."
Mr Gethins said, with the prospect of further energy bill hikes "causing anxiety" for many Scots, the "early action from the new Prime Minister is very welcome." But he cautioned that "the £45 saving could be quickly eroded if the energy price cap increases again in October because of international events."
Calls for more action
Mr Gethins noted: "Just two years ago, the UK Government came to power promising to cut people's bills by £300, but they are now almost £300 higher." He added that while Scottish ministers "look forward to working with our new Westminster colleagues, we will be pushing for more action on bills from the UK that meets the Scottish Government's ambition."
He stressed: "Scotland is an energy-rich country, so nobody should be struggling to pay their bills. If the UK Government is serious about devolving more power away from Westminster they would finally put control of Scotland's energy resources in Scotland's hands."
David Hilferty of CAS said the action to remove VAT from electricity bills was "welcome," noting the organisation's advice network "increasingly supports people where energy has become a luxury commodity, rather than what it is of course – an essential service that all of us need." He said: "The early pace on this is hopefully a sign of more to come. What needs to follow is action at scale that provides real breathing space in what feels like a never-ending, cost-of-living emergency. That means bold and lasting change such as an affordable, social tariff and faster progress on the energy debt relief scheme. It's long past time to rewire the energy system so that everyone can afford to keep the lights on and their homes warm."
Consumer Scotland chief executive Sam Ghibaldan also called for further action, saying: "This announcement is welcome at a time when many households are struggling to pay their fuel bills. However, there remains a strong case for more targeted support for households alongside wider action to tackle the growing burden of energy debt. We strongly recommend both UK and Scottish Governments continue to work with us and other key bodies to develop policies that will help households struggling most with the cost of living."
