Motherwell, Wishaw and Carluke MP Pamela Nash has welcomed the removal of VAT from household electricity bills by new Labour Prime Minister Andy Burnham.
Households throughout the constituency and across the UK will benefit from immediate action to help with their electricity bills this winter, giving people some breathing space and help with the cost of living.
Tax Cut to Tackle Rising Bills
The Labour Government is tackling rising bills with a tax cut to remove VAT from domestic electricity bills from 1st October in time to impact the next Ofgem price cap. This immediate action applies and is funded for this financial year.
The cost is being funded from the cancellation of the (£1.8bn) Digital ID programme. Any further action, including on funding for longer-term measures, will be taken at the Budget alongside an OBR forecast. All decisions at that point will continue to be funded and also consistent with the government’s fiscal rules.
Local MP Welcomes Relief for Constituents
Nash said: “The new Prime Minister’s announcement to cut tax from household electricity bills will be a welcome relief to residents across the constituency battling with the cost of living.”
“This swift action from Andy Burnham shows that the Labour Party is on the side of families and working people.”
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.
“We’re taking immediate action to cut taxes on energy bills, put more money in people’s pockets and bring back hope.”
Expected Savings and Impact
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.
As part of the day one commitment to bring back hope to Britain, the change supports the poorest households, who spend a higher percentage of their income on energy bills.
