Household Energy Bills: VAT

Mary Kelly Foy Excerpts

Tuesday 11th January 2022 Commons Chamber

[Mary Kelly Foy (City of Durham) (Lab)]

It is undeniable that the cost of living is spiralling out of control and the situation is being made bleaker by sky rocketing energy prices. The Government have failed to prepare for and refused to respond to the problem. When the new energy price cap is announced, households in Durham and across the country face a potential 46% rise in their energy bills, yet the Government are doing nothing to protect ordinary people from that hammer blow.

Fortunately for the Government, while they dither, the Labour party has a plan to protect households from the worst of the spiralling energy costs. The Government must act immediately to reduce the financial burden on households. According to polling by YouGov, a third of people say that a £25-a-month increase in their living costs would be unaffordable, while 50% say that they could not afford a £50-a-month increase. I do not think the Government truly appreciate the gravity of the situation for ordinary people. Labour’s plan would mitigate the impact of energy price rises by temporarily scrapping VAT on domestic energy bills, while taking steps to prevent the costs of supplier failure from being passed on to consumers.

We also recognise that there are those who need greater protection from these rises, which is why Labour would expand the warm homes discount and increase it from £140 a year to £400 a year, ensuring that it reaches squeezed middle-income and low-income households as well as pensioners. This, combined with our other proposals, would give eligible households a £600 a year reduction in energy payments.

The Government will no doubt protest that these plans cost money, but what is public money for if not to be spent on the public? At a time when households are experiencing greater pressure than ever on their resources, it is the Government’s duty to relieve that pressure. The best bit about this is that it could be paid for by a windfall tax on North sea oil and gas profits. As ordinary people are left to shiver in their cold homes or to pay through the nose for energy, these oil and gas companies are expected to report near record income in 2021-22. That simply is not right, and Labour would make these companies pay.

However, we cannot just look at short-term solutions to the crisis. We must also look to the future. Our energy system is broken, and it needs reform to make it greener and more sustainable by accelerating the switch from gas to homegrown renewables and by ensuring that millions of people in Britain have warm and well-insulated homes.

MPs have a simple choice today: we can vote to ease the squeeze on families across Britain or we can leave many to choose between heating and eating. I know which I will be voting for.

[Several hon. Members rose—]