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Andy Burnham to remove VAT from household electricity bills

tvJul 21, 202622272

On his first full day as prime minister Andy Burnham announced the government will cut VAT on domestic electricity bills from 5 percent to 0 percent for six months beginning in October. The move, announced at 06:00 BST, is expected to deliver an average yearly saving of 45 pounds for households and the government says it will fund the measure by scrapping the planned digital ID scheme. Business Secretary Jonathan Reynolds said the Office for Budget Responsibility had scored the digital ID at 1.8 billion pounds and defended reallocating those funds as a legitimate decision. Former prime minister Keir Starmer's chief secretary Darren Jones disputed that funding is clear, saying the digital ID programme was unfunded. Fuel poverty charity National Energy Action welcomed the VAT cut while Liberal Democrat leader Ed Davey said it did not go far enough. Reynolds called the policy simple, deliverable and a way to give people "breathing space" but acknowledged the measure is not everything. Burnham and his chancellor John Healey said they will maintain fiscal discipline even as they prioritise the cost of living crisis.

Fionna O’Leary
@fascinatorfun.bsky.social

Good move to announce the removal of VAT (@5%) on electricity bills, operative 1-10-26. NB NOT gas bills. Another move to start the ratchet of reducing the ratio between gas and electricity, thus reducing the cost risks of installing heat pumps in gas/oil CH homes www.bbc.co.uk/news/live/cg...

6245d ago
Fionna O’Leary10

So, on a rough calculation, all electric non heat-pump home currently paying £180 pcm (£2160 pa) will save over £108 a year The same home, if it installed an Air to Air heat pump (good for all electric homes) would likely save a further £1,000 a year on top of that, soon paying for the heat pump

Susan 🐝🐓🪴🌻🇪🇺🇺🇦2

It isn’t targeted and disproportionately benefits those who can afford to change to solar & heat pumps, which requires significant investment up front.

Mark Purchase 🏴󠁧󠁢󠁷󠁬󠁳󠁿 🇪🇸 🇪🇺1

Strangely Spain recently (1 June) returned IVA to 21% on energy bills Even more strangely the price of electricity is still loads cheaper in Spain Cutting VAT isn’t the answer to cheaper energy

Chris Midgley1

The removal of the marginal pricing system for electricity would be welcome. I would happily give up my fifteen year old gas boiler (in perfect working order) and go for an electric boiler (air heat pump not financially viable, house would need re-piping). Just had a 15Kw battery system installed.

PWCoghlan1

Two awkward points arise from the welcome announcement besides separating gas & electricity charges 1. The further prospect of fantasy economics in that no funding was allocated for the scrapped digital ID 2. It's only a matter of time before some obnoxious Tory troll squeaks "Brexit benefit" 🤔

igtbok.bsky.social1

My respect for Darren Jones just fell through the floor. Petulant. The only person he has damaged is himself.

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