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‘NO VAT CUT ON ENERGY BILLS’

£60 a year blow to families as Labour calls on Sunak to fulfil Tory pledges

By John Stevens Deputy Political Editor

‘Why have they not done it?’

RISHI Sunak last night ruled out slashing VAT on household energy bills in tomorrow’s Budget.

The Chancellor has been under huge pressure to cut the levy and help families struggling with soaring prices.

But Treasury sources said he believed the move would subsidise well-off households while doing too little for the poorest.

The VAT rate of 5 per cent on fuel bills sets households back by around £60 a year. Scrapping it would cost the Treasury around £1.6billion.

Rachel Reeves, Labour Shadow Chancellor, said ministers should deliver on a promise they made in the 2016 European Union referendum campaign.

Boris Johnson and Michael Gove pledged to scrap VAT on energy bills if the UK left the EU. ‘When we Vote Leave, we will be able to scrap this unfair and damaging tax,’ they wrote in a joint article.

‘It isn’t right that unelected bureaucrats in Brussels impose taxes on the poorest and elected British politicians can do nothing.’

In an interview with the Daily Mail, Miss Reeves said: ‘They said it in the referendum campaign so why have they not done it?

‘What more evidence do you need to cut VAT domestic energy bills? This is the time to do it when they are soaring so much. The good thing about cutting VAT is it can be done immediately and automatically on bills. So people don’t have to apply for it, there’s no bureaucracy to go through and everybody is affected by rising gas electricity bills.’

Miss Reeves accused ministers of wasting billions of pounds of public money over the past two years. She highlighted examples including £438million paid to consultants working on test and trace at rates of up to £6,600 a day.

‘The reason why it matters is because the Government are now coming to ordinary working people and businesses and asking them to pay more national insurance,’ she said. ‘And yet they’ve been wasting taxpayers’ money and not showing the respect for taxpayers’ money that I think it deserves.

‘It is a lack of understanding about how families, pensioners and businesses are struggling right now with rising costs. I’m not sure if ministers fully comprehend the difficult decisions that families and businesses are having to make at the moment.’

Miss Reeves told how people including her 67-year-old mother were struggling to see GPs face to face. ‘We are in a situation now where people are being taxed more than at any point since the Second World War Two,’ she said.

‘Do people think they are getting

better services than at any point since the Second World War? I can tell you from talking to my constituents and my family that is not how people are feeling.

‘I spoke to my mum at the weekend about how long she’s waiting to see a GP face to face or to get routine tests. It’s the same for so many people, you wait ages in a queue to speak on the phone to someone, and then there’s no appointments available for a couple of weeks.

‘Or look at schools in my constituency and what’s happening with class sizes. So people are being asked to pay more than they’ve ever been asked to pay before and yet public services – despite I think how hard a lot of people that work in the public sector – are getting worse.’

The Treasury sources said Mr Sunak has ruled out a cut to VAT on household energy bills as he believes it would be ‘poorly targeted’ and lead to ‘subsidising thousands of well-off households and not providing enough help to those who most need it’.

Household bills have risen as the energy price cap was raised this month and cheaper tariffs have been withdrawn. Families on a standard tariff with typical energy usage have seen their bill rise by £139 to £1,277 a year.

▪ Mr Sunak was berated by the Commons Speaker yesterday for briefing many details of the Budget in the days before it is published. Sir Lindsay Hoyle said past chancellors would have resigned for ‘riding roughshod’ over parliament’s expectation to be informed of policies first.

The Treasury has already revealed 16 measures even though the economic statement is not delivered until tomorrow.

Yesterday Mr Sunak’s department briefed that there would be almost £6billion for the NHS.

Sir Lindsay said: ‘I have made clear repeatedly, and as recently as last Thursday, that ministers must make important announcements first to this chamber.

‘Despite those very clear comments, it’s evident that the Treasury briefed journalists on the content of the forthcoming budget over the weekend.’

NEWS

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