Household Energy Bills: VAT

Debate between Gerald Jones and Baroness Laing of Elderslie

Tuesday 11th January 2022 Commons Chamber

[Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)]

I rise to speak briefly in support of the motion.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I beg the hon. Gentleman’s pardon, but I have to reduce the time limit to three minutes.

[Gerald Jones]

Thank you, Madam Deputy Speaker.

Families in Merthyr Tydfil and Rhymney and across the country face a bleak start to the new year. Rising energy costs are especially concerning at the coldest time of year. The cost-of-living crisis is growing. Shopping baskets were £15 more expensive this Christmas than last Christmas because of inflation, and the price of petrol was 24% higher. Families face real pressures on their household incomes this winter, yet so far the Government have not stepped up to the challenge and offered anywhere near adequate support.

Next month, a new price cap is likely to be announced to take effect from April 2022, and there is some alarming speculation that bills could rise by as much as 46%. Undoubtedly, some will point to the rise in energy bills being partly due to the short-term increase in the global gas price, but let us be clear: the reality is that a decade of Conservative government has left us exposed to the market. Do the Government recognise that their failure on regulation and gas storage, the delay in new nuclear and renewables, and the failure to insulate homes properly have led to working people paying the price for the Government’s incompetence?

Labour’s plan, which the motion outlines, will go some way to support families up and down the country who face a cost-of-living crisis here and now. We know that oil and gas producers in the North sea have posted huge profits during the pandemic. A windfall tax to help cut VAT on home energy bills and ease the burden on working families is appropriate at this most difficult time for families across the country.

Cutting VAT on energy would save most households around £200 on their bills at a time when the poorest need support. We also know that the Prime Minister, the Levelling Up Secretary and the Home Secretary backed cutting VAT on fuel in the past. Therefore, the Government could support the motion. Why are they so far refusing to do so? As I said, Labour’s plan would save most households £200 while targeting support at low earners, and pensioners would save £600. The plan tries to ensure that people do not have to choose between eating and heating.

The Welsh Labour Government have already announced a £38 million winter fuel support scheme that directly supports families to cover their energy costs and keep their homes warm this winter. That demonstrates the Welsh Government’s willingness to offer support to those most in need. The Welsh Government never shied away from trying to support families through the crisis. We now need the UK Government, with all their financial clout, to step up to the plate and deliver for those who need it most at this most difficult time. I urge all Members, particularly those on the Conservative Benches, to do the decent thing and support the Opposition motion.