Household Energy Bills: VAT

Debate between Rachel Reeves and Andrea Leadsom

Tuesday 11th January 2022 Commons Chamber

[Rachel Reeves]

I would say to my hon. Friend’s constituent that, under Labour’s plans, £600 would be taken off her bills in April compared with what will happen without Government action. That protects my hon. Friend’s constituent and many millions of constituents like her who are struggling through no fault of their own right now.

During his Budget speech, the Chancellor said that the role of “Government should have limits.” I wonder if the Chancellor’s refusal to act so far is because he does not politically believe it is the role of Government to help alleviate soaring energy bills, or is it just that it is not a priority for him right now? The complete absence of action from Government speaks for itself. People deserve a Government who are on their side. Labour has a plan for action now to help with bills and to prevent the Government’s mistakes of the last decade from being repeated again. We want to give support and security to families now and to keep bills low for the future. That is why Labour will reduce our reliance on imported gas by accelerating home-grown renewables and new nuclear. Our plan to make sure that 19 million homes are warm and well insulated will save households £400 not just for one year, but each and every year on their bills. We will regulate the market better, with a pledge to never again let energy companies make promises to working families that they cannot keep.

[Dame Andrea Leadsom (South Northamptonshire) (Con)]

I am grateful to the hon. Lady for giving way, but I am incredibly disappointed. She is making some very good points about the cost of living, but today’s motion is cynical. It has nothing to do with trying to save costs for consumers, and everything to do with Labour Members trying to make a point about taking control of the Order Paper, just as they tried to do during the Brexit debate, to try to undermine the Government. They know full well that the Government cannot possibly accept such a cynical tactic from Labour, so we will have to vote it down without any consideration whatsoever. She knows that. This is not about Labour trying to save costs for consumers; this is just about Labour playing politics, is it not?

[Rachel Reeves]

On 9 June 2016, the right hon. Lady said:

“We are unable to get rid of VAT on fuel bills”

because the EU prevents us from doing so, despite fuel poverty, but nothing prevents the right hon. Lady from doing the right thing today by voting with us this evening.

There is a straight choice in today’s vote. A cut in VAT will make a real difference. If someone is on a lower income, they will feel the benefit of a VAT cut on their bills because they spend more of their household budget on energy. If someone is a pensioner, they spend twice as much on energy and will be hit even harder by the rising energy price cap. A cut on VAT for home energy bills would be an immediate relief for all. I can understand why the Government do not want to back Opposition policies, as the right hon. Lady has said. However, they would in fact only be honouring the Prime Minister’s own commitments, because the Prime Minister was once the greatest advocate of the VAT cut on home energy bills. In 2016, he said:

“When we Vote Leave, we will be able to scrap this unfair and damaging tax.”

Not once, but three times he has backed a VAT cut on energy bills. Many on the Government Benches have since joined that call. The Chief Secretary went halfway there just last year when he said that VAT on electricity should be cut. But now that the Prime Minister has a chance to actually do something, and he and his Chancellor say no. The problem is that you cannot pay bills on broken promises.

Speaking of the Chancellor, yet again he is in hiding. He was not here yesterday when we debated fiscal responsibility, and he is not here today to debate the cost of living. Maybe he has gone back to California. Had he been here, I would have asked him not just about his broken promises on VAT; I would also have asked, given that he lives and works next door to No. 10 Downing Street, how long he has known about the party on 20 May 2020, and what he has done or said about this disgraceful breach of lockdown rules. Was he at the party when it happened next door, or was he at his window taking the pictures? He might not want to answer my questions, but the country deserves to know whether he too has colluded in the 18-month cover-up.

In just 80 days’ time, on 1 April, working people will be hit—[Interruption.] Get on your feet. Tell your constituents why you will not be voting for a reduction in VAT this evening. Be my guest.