Reports suggest that Chancellor Rachel Reeves is considering a 5% cut to value-added tax (VAT) on domestic electricity and gas bills. While the aim to reduce energy bills is welcome, these reports suggested this cut would come at the expense of spending previously earmarked to remove levies from electricity bills – a critical action which is widely seen as a necessity if the UK is to meet its carbon budgets and make heat electrification an affordable option for a wider range of households.
Over 50 organisations have signed our letter calling for the Chancellor to prioritise reducing electricity bills, rather than splitting bill reductions more thinly across both electricity and gas. Signatories include EnergyUK, Citizens Advice, Greenpeace, and major energy suppliers such as E.ON, Octopus, OVO and Good Energy. The letter sets out how electricity bill reductions benefit a broader range of households, especially some of the country’s poorest households, and remove a key barrier to electrification.
The Financial Times ran the story on 12 November.
