Burnham cuts VAT on household electricity bills; UK borrows less than expected in June – business live

The removal of VAT from electricity bills is positive but it does not address the scale of the problem that British households are facing, campaigners at the End Fuel Poverty Coalition have said. Simon Francis , coordinator of the group, said: double quotation mark 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. The prime minister’s next move must be to go even further on bringing down the cost of energy and bringing in increased levels of targeted support for those who need it most: an enhanced warm home discount, reformed cold weather payments and an energy debt relief scheme. This breathing space is also not a cure. The only way to bring bills down for good is to change how they are set. That means breaking the link between gas and electricity prices, tackling excess profits in the energy industry and ending our exposure to volatile fossil fuel markets through homegrown renewables and more energy efficient homes. But many in the energy industry are welcoming Burnham’s move today, including Martin Pibworth , chief executive of SSE ,: double quotation mark Cutting VAT gives immediate relief to homes and businesses and is a very welcome first step to making electricity as cheap as possible. Electrifying our economy is the way we take advantage of cheap, homegrown renewable power to cut bills, reduce energy dependence and boost economic growth. SSE added that its analysis found that 70% of the increase in domestic energy bills since 2017 has been driven by global commodity prices and inflation. Richard Neudegg , director of regulation at Uswitch.com , added that the removal of VAT on electricity bills in October could help households deal with global rises in energy prices triggered by the conflict in the Middle East. double quotation mark There is continued pressure on wholesale prices, driven by the situation in the Middle East, meaning it is likely that the October 1 price cap will increase. Some supplier predictions suggest the next price cap could rise 5% from October for a household with both gas and electricity, so this tax change could take the sting out of a potential increase. There’s still time for customers to lock in significant savings before winter by switching to a good-priced fixed tariff. The cheapest deals are currently undercutting standard rates by £210 for the average household. Doing so on top of this VAT change could leave households considerably better off over the winter.