PM urged to ‘stand up’ to chancellor on energy VAT cut

Labour urged Boris Johnson to “stand up” to Rishi Sunak and axe VAT on energy on Wednesday (5 January) as the prime minister came under fire from MPs across the House of Commons over rising bills.

Opposition deputy leader Angela Rayner, filling in for Sir Keir Starmer at PM’s question time after the latter tested positive for coronavirus, accused the government of making working families pick up the tab for its “incompetence” on energy policy.

She said: “His government have failed to invest in long-term energy security. His government decided to let gas storage collapse. His government let the energy market run out of control: 27 energy companies have gone bust in the past year, and now household bills are going through the roof.

“When the tax rises are combined with soaring energy prices, the average family faces a £1,200 hit. This is an iceberg, right ahead of us.”

And Rayner called on Johnson to “finally stand up” to chancellor of the exchequer Rishi Sunak by accepting Labour’s proposal to cut the 5% VAT rate on energy to zero.

She said: “When energy bills are to be hiked again in April, any decent government would find a way to help British families. Even Tory back benchers have finally accepted Labour’s call for a cut in VAT on energy bills.”

Defending the government’s record, Johnson pointed to the support the government has provided for customers via schemes like the Warm Homes Discount, although he repeatedly and mistakenly said it is worth £140 per week for recipients as opposed to per annum.

He said: “Labour’s failure to invest in supply over a decade or more that reduced our ability to have cheaper, cleaner energy. We are rectifying that. We are taking the tough decisions that this country needs for the long term.”

The prime minister also accused the opposition of “effrontery” by calling for a cut to the VAT on energy, which he claimed would have been “impossible” if the UK had remained more closely aligned with the EU single market.

He said: “They now have the barefaced cheek to come to this House of Commons and say that they want to cut VAT on fuel…when everyone knows full well that that would be absolutely impossible if we were to do what Labour would do, go back into the EU and remain aligned with the EU single market.”

Conservative backbench MP John Penrose called for “structural reforms” to the energy price cap and improvements to the UK’s energy self-sufficiency to “uncouple” the country from reliance on Russian gas.

He said: “Labour’s short-term proposals to shift the burden from bill payers to taxpayers will not address the fundamental underlying problem at all.”

Responding to concerns raised by Lincolnshire Tory MP Caroline Johnson about energy affordability in rural areas, Johnson emphasised the government’s support for the transition to low-carbon power system, which has recently been blamed by some Conservative backbenchers for fuelling spiralling energy bills.

He said: “The most important thing that we can do to help people in her constituency and across the country is to have sustainable, clean, cheaper forms of energy, and that is what this government are investing in now. We are taking the tough decisions necessary.”

Following Wednesday afternoon’s question time and a subsequent meeting between business secretary Kwazi Kwarteng and suppliers, Sky News has reported that Johnson will announce help to cut energy bills within the next month.