Household Energy Bills: VAT

Lloyd Russell-Moyle Excerpts

Tuesday 11th January 2022 Commons Chamber

[Mr Clarke]

The share of our support is going up. We are also increasing the number of people who are likely to be in scope. We are consulting on increasing the number of people for whom that discount provides a benefit by 780,000. It will also likely rise in value from £140 to £160, so it is an expanding benefit.

Vulnerable households will also be supported with the cost of essentials through the £500 million household support fund. That funding has been made available to local councils across England to support their residents this winter. Importantly, in recognition of the fact that families should not have to bear all the VAT costs they incur to meet their needs, domestic fuels such as gas and electricity are already subject to a reduced VAT rate of 5%. In response to the Opposition’s calls to go further on VAT costs, I would note that that would mean our spending a significant amount on subsidising the fuel consumption of some of the wealthiest. When we look at our response to all these challenges, we need to ensure that we spend taxpayers’ money on the most effective possible interventions to support the households struggling the most with the cost of living.

The cost of living is not about any single bill or expense. That is why, at the autumn Budget, the Government put in place a host of measures to help families with the cost of living.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

There has been a £67 council tax rise, a national insurance rise of £250 and an income tax rise of £150—those are averages, for the average person. How on earth can the Chief Secretary say that his Government have put measures in place to help the ordinary person in this cost-of-living crisis when he will be clobbering them with, on average, a £1,405 bill? What they are doing is disgraceful.

[Mr Clarke]

That was a typically temperate intervention from the hon. Gentleman. To make sure that work pays, we have cut the universal credit taper rate by 8p, from 63p to 55p. That is an authentically Conservative response to make sure that we target our interventions to help people. We are increasing the work allowance by £500. Taken together, that is a tax cut for 2 million low-income families, which is worth £2.2 billion, or an extra £1,000 a year in their pocket. It was a Conservative Government who introduced the national living wage in 2016, and it will be a Conservative Government who increase the national living wage in April by 6.6% to £9.50 an hour for workers aged 23 and over.

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[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

The cost of living is ratcheting up, but it did not need to be this way. It did not need to be this way because the Government have implemented a number of tax increases. It did not need to be this way because the Government have failed to ensure that food prices, energy prices and other costs of living, including housing costs—with the inflated housing market, people are paying far too much for renting their houses—have been controlled.

It did not need to be this way because, for over a decade, this Government have made poor choices on energy. They banned onshore wind farms. This is now one of the cheapest forms of electricity known to this country, but it was banned for 10 years by this Government, who only U-turned last year, in the midst of a pandemic, when they realised there were very few options left for them. They cut the solar feed-in tariff, which meant that hundreds of poor families who would otherwise have chosen the option of having solar panels on their roofs could no longer afford to do so, and it became a luxury limited to the rich and middle classes. And, of course, they failed to invest in truly insulated green homes, and their insulation schemes have been a disaster.

I am no fan of the tactics of Insulate Britain, although I defend to the hilt their right to protest, but what they are right about is the simple failure of this Government to insulate every single home in the country. It is possible that family energy bills could have been reduced, almost decimated. We could still do that now, in just a few years: every council house, every social house, every house in the rented sector and then the houses that are owned could be transformed through a street-by-street measure. However, this Government have no answers apart from silly giveaway grants that do not even touch the sides of the insulation of a home, let alone its transformation into a Passivhaus or something approaching it.

As for our proposal, it is a short-term fix for the year. It means slashing VAT, but also ensuring that we make long-term investments in green energy. Investing in our country and our infrastructure can be a possibility, but only by voting for this motion today will we start to turn the tide of Government failure on the cost of living, on bills and on our climate.