Energy crisis: Major tax cut proposed to avoid nightmare 50% increase in bills

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Sir Keir Starmer’s party wants the Government to commit an extra £3.5bn to the warm homes discount. This would increase it from £140 to £400 per year and double the number of households eligible to 9.3 million – around a third of the UK total.

He also wants to remove the five percent VAT rate on domestic energy bills from April for 12 months.

Labour claims this would produce an annual average saving of £89 per household.

Sir Keir is preparing to table the proposals as spiralling whole energy prices threaten to send household bills up 50 percent.

Trade body Energy UK had predicted the sky-high rise could hit squeezed households in April – when changes to the price cap kicks in.

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The motion requires MPs to actively vote for or against the legislation to implement a cut – forcing Boris Johnson’s party to make a decision either way.

It comes after the Government ruled out a windfall tax on North Sea Oil and Gas profits on Sunday.

Sir Keir said Labour was “stepping into the vacuum of leadership that the Government has left with a plan to actually reduce bills”.

It will use a Commons debate later today to set up a vote next month on its proposals for a VAT cut.

Many Tories are also demanding action – including a cut on levies for green energy – to bring prices under control.

The Prime Minister has vowed to act – as households face a cost of living crisis also being fuelled by increasing inflation and rising prices.

Speaking yesterday, he said the rises were driven by “general inflationary pressure” caused by the world economy “coming back from Covid”.

But he added: “We’ve got to help people, particularly people in low incomes, we’ve got to help people with the cost of their fuel – and that’s what we’re going to do.”

The Prime Minister is expected to discuss options with Chancellor Rishi Sunak this week although a decision is not expected imminently.

It comes as Emma Pinchbeck, head of trade body Energy UK, said that the rises were now starting to hurt the economy.



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