Brexit offers chance to cut energy bills

Withdrawal from the EU gives the UK the opportunity cut energy bills by slashing VAT, industry leaders have said.

Leaving the EU will give the UK scope to cut VAT rates on energy bills, with an estimated saving for the average consumer of £60 per annum, according to Stew Horne, energy regulations principal policy manager, Citizens Advice.

Horne made his comments to the business, energy and industrial strategy (BEIS) committee today. The committee was holding its second evidence session in an inquiry into the implications for energy and climate change policy of Britain’s withdrawal from the EU.

Cutting VAT on energy bills was touted by EU Leave campaigners during the referendum as one of the main benefits of exiting from the union.  

However, Joanne Wade, director of the Association for the Conservation of Energy, said that prioritising a reduction of VAT on materials rather than bills would bring greater benefits to consumers, especially households on lower incomes because they spend a bigger proportion of their income on fuel.

“You could end up with more money in the pocket of higher earning households and potentially more carbon emissions,” under the bill-led approach she said.

Isaac Occhipinti, head of external affairs at the Energy and Utilities Alliance also advocated cutting VAT rates on energy efficient building materials to combat fuel poverty while reducing carbon emissions. In addition, he said that the UK’s exit from the EU would give it the opportunity to rebalance its approach to decarbonisation in order to become less focussed on electricity generation.

Philip Sellwood, chief executive, Energy Saving Trust said that while efforts to tackle energy efficiency could largely continue to rely on UK government regulations, measures to boost uptake of renewable energy were “almost entirely dependent” on EU directives.

He said: “If there were not those regulations I am not sure we would be doing any better than currently.”