PM’s rationale for keeping VAT on energy is ‘disingenuous’

The rebel MP, who was expelled from the Conservative parliamentary party last week after backing a Labour motion to cut VAT from energy bills, has branded the prime minister’s rationale for not doing so as “disingenuous.”

Anne Marie Morris, the MP for Newton Abbot, is sitting as an independent after she had the Tory whip withdrawn because she had voted for Labour’s VAT motion to slash the VAT rate on energy bills from 5% to zero.

In a debate on energy costs in the House of Commons’ Westminster Hall on Tuesday (18 January), Morris criticised the government’s reluctance to cut VAT on energy, which Boris Johnson recently labelled a “blunt instrument” even though the prime minister had touted this move during the Brexit referendum campaign.

The majority of potentially beneficiaries from the cut deserved it, she said: “To be reluctant to reduce, and to resist reducing, VAT from 5% to 0%—the most obvious, quickest and easiest universal solution—is perhaps a little disingenuous. It seems to me that at least 60% of the people who would benefit from that actually deserve it.

“It is not just the usual smaller percentage of the population that is suffering; it is actually a much larger percentage of the population.”

Despite the £1.7 billion to £2 billion cost, the proposed cut is “the right thing to do”, Morris said: “It is entirely affordable given the likely income that the government can expect as the economic forecast improves across the country.

She added that the VAT should be combined with more targeted support via an increase in the Warm Homes Discount.

Alan Whitehead, shadow energy minister, said the withdrawal of the whip from Morris, had been shameful”, adding that a recent boom in VAT receipts meant that Labour’s mooted cut could “easily be afforded”.

But alongside measures to ease the immediate pain for consumers, Whitehead urged the government to “look seriously” at how reliant the UK has become on gas.

“We need urgently to reform the wholesale energy market and balancing market so that the market is not delineated in gas and it works in a way that properly reflects the increasingly dominant form of energy production that is renewables. Had we done that, although the gas price issue would have been considerable, it would not have been as damaging and as universal as it has been under the present circumstances.”