Rishi Sunak: What to expect from budget with Victoria Scholar
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Chancellor Rishi Sunak has reportedly refused to cut the European Union’s five percent energy tax, despite facing mounting pressure from the Labour opposition and British public. Cheaper bills and greater control over the UK’s energy market were some of the key pledges of the 2016 Vote Leave campaign. At the time, Boris Johnson and Michael Gove vowed to slash the EU’s VAT on domestic energy while promising “fuel bills will be lower for everyone”.
In a joint letter, they both wrote: “When we Vote Leave, we will be able to scrap this unfair and damaging tax.
“It isn’t right that unelected bureaucrats in Brussels impose taxes on the poorest and elected British politicians can do nothing.”
But the Government appears to have backtracked on this Brexit campaign pledge, according to recent leaks, despite warnings about a devastating winter ahead.
Surprisingly, the Labour Party has joined the chorus of voices calling for the energy tax to be scrapped to prevent families from being hit with soaring bills and rising prices.
Bridget Phillipson, Shadow Chief Secretary to the Treasury, said: “When we pay our gas and electricity bills, five percent of that automatically goes to the taxman.
“That’s something very simple the Government could do.
“It would be immediate and it would be felt automatically on people’s bills next month, and that is to cut that rate of VAT from five percent to zero percent.”
Rachel Reeves, the shadow chancellor, has also called on Mr Sunak to scrap the VAT for six months, starting on November 1.
The move, she argued, would help “see people through the winter months”.
Labour’s call to scrap the tax was welcomed by Brexit mastermind Nigel Farage, who said another Ukip policy had gone mainstream.
The former Ukip leader tweeted: “Pleased to see the Labour Party embrace Brexit by asking the Government to scrap five percent VAT on domestic fuel bills.
Rishi Sunak grilled by Andrew Marr on cutting taxes
“Under EU rules we could not do this before… Another UKIP policy goes mainstream.”
Prime Minister Johnson now faces accusations of betraying the Conservative and Brexit voter base by refusing to make good on his promises.
Many people reacted to the leak on social media, voicing their discontent with reported news.
Twitter user Peter Gray said: “We really need to strip back government.
“Strip back pointless legislation and be allowed to turbocharge the UK economy post-Brexit (this includes the missing £20billionn of fishing revenues).”
And Brian Johnson said: “The inability to remove VAT on energy bills was touted by Vote Leave as a reason for #Brexit.
“Why, then, has the Vote Leave government not done so immediately on leaving?
“Anyone would think that #Brexit was nothing to do with trade and economic policy.”
In the weeks leading to the Autumn Budget, trade bodies have called on the Government to scrap the energy tax to protect consumers this winter.
The rising cost of energy and gas have already shaken the markets, prompting more than a dozen small energy suppliers to collapse since the start of the year.
The dire situation, which has been attributed to dwindling reserves of natural gas and reports of Russia withholding supplies from Europe, could leave many households struggling to keep warm this winter.
According to Mike Foster, CEO of the not-for-profit energy trade association the Energy and Utilities Alliance (EUA), the VAT cut could save Britons up to £65 a year.
Energy bills have already spiked by up to £150 for customers on the £1,277 Price Cap and pundits predict spring will bring more spikes.
Mr Foster told Express.co.uk: “Three-quarters of the population want to see VAT cut on fuel.
“And so, given it was promised by the Prime Minister and a member of the Cabinet a couple of years ago, in effect, in an election campaign, it would now be the ideal time to fulfil that promise.”
Express.co.uk has asked Downing Street to comment.
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