Johnson dismisses VAT cut on energy as ‘blunt instrument’

Boris Johnson has not ruled out further measures to help cash-strapped customers with their energy costs but dismissed cutting VAT on energy bills as a “blunt instrument”.

At his Downing Street press conference on Tuesday evening (4 January), the prime minister was confronted on whether he had changed his mind about support he expressed during the Brexit referendum for axing the 5% VAT rate on energy bills.

But the PM poured cold water on the idea.

He said: “It’s a bit of a blunt instrument and the difficulty is that you end up also cutting fuel bills for a lot of people who perhaps don’t need the support in the direct way we need to give it. We need to help people who are in fuel poverty the most.”

In an article for the Sun, jointly written with ex-Labour MP Baroness Stuart and his Cabinet colleague Michael Gove three weeks before the 2016 vote, Johnson flagged up the freedom for the UK to cut VAT on energy bills as one of the potential benefits of leaving the European Union.

The article said: “When we Vote Leave, we will be able to scrap this unfair and damaging tax.”

However, Johnson said he is “not ruling out further measures” to cushion customers from the impact of rising energy bills, pointing to the help that the government is already providing through initiatives like the Warm Homes Discount and Winter Fuel Payments for pensioners.

“There are all sorts of things we can do to help people. I appreciate difficulties people are facing because of the increase in gas prices.

He added that chancellor of the exchequer Rishi Sunak is “very mindful of the increase in energy prices and the effect of the increase in energy prices on people up and down this country and we will do all we can.”

The prime minister also took a pot-shot at those calling for the VAT cut, arguing that it is “slightly paradoxical this is being campaigned on by people who wanted to remain in the EU.”

The campaign to cut VAT on energy bills has been spearheaded by the Labour opposition but also backed by pro-Brexit politicians, including MP Steve Baker and former trade secretary Lord Lilley. They were among 20 signatories to a letter to the Telegraph newspaper earlier this week calling for the VAT cut alongside an axe to green energy levies.

The PM’s comments on Tuesday came ahead of a crunch meeting to explore potential measures to ease bill pressures, which is due to take place later today, between the industry and business and energy secretary of state Kwazi Kwarteng.