The Government is removing the 5% VAT charge on domestic electricity bills from October 1 until April, a move welcomed as a first step but criticized as insufficient to tackle Britain's fuel poverty crisis. The End Fuel Poverty Coalition said the cut is a “positive statement of intent”, yet stressed millions are still forced to spend an unaffordable chunk of their income on energy.
Savings and concerns
For a typical household, the saving is expected to be about £45 a year – less than 90p a week – though the exact figure depends on energy usage, with some families benefiting more. Homes with electric heating, heat pumps or electric vehicles are likely to see bigger savings. However, campaigners warned the gain could be wiped out if wholesale energy prices rise again.
Ofgem is also changing how it defines a “typical” household from October, a move that could make future bill comparisons harder for consumers.
Call for further action
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: "Removing VAT from electricity bills is a positive statement of intent by the new administration. But it does not address the scale of what households are facing, with millions still left paying an unaffordable share of their income on energy and record levels of energy debt built up over successive winters of high bills."
He called for an enhanced Warm Home Discount, reformed Cold Weather Payments, an energy debt relief scheme, and structural changes to break the link between gas and electricity prices, tackle excess profits, and end exposure to volatile fossil fuel markets through homegrown renewables and energy-efficient homes.
Although energy bills are down from the peak of the crisis, they remain far higher than before Russia's invasion of Ukraine, and millions of households are still in debt to suppliers.
