New PM cuts tax on household electricity bills to give breathing space for people in Stoke-on-Trent

Gareth Snell, Labour and Co-operative Member of Parliament for Stoke-on-Trent Central has welcomed the announcement to remove VAT from domestic electricity bills from October 1 in time to impact the next Ofgem price cap. This immediate action applies and is funded for this financial year.

The cost of this immediate action for this financial year – taken now, before the next price cap – is being funded from the cancellation of the (£1.8bn) Digital ID programme.

Any further action, including on funding for longer-term measures, will be taken at the Budget alongside an OBR forecast. All decisions at that point will continue to be funded and also consistent with the government’s fiscal rules.

Gareth said:

“Across Stoke-on-Trent Central, residents have told me time and time again that their household energy bills keep rising leaving them struggling.

Over the past 2 years, I have consistently advocated for more government support to deal with rising energy costs for both households and businesses.

 I am pleased to see that one of the first announcements from the new PM is a commitment to tackle the cost-of-living crisis to give people more “breathing space”.

Cutting VAT on electricity bills is expected to take around £45 off the yearly Ofgem price cap in October. This is on top of the £150 removed from bills at the last Budget.  

By targeting electricity bills, more people will be supported with rising bills and the government is helping to keep inflation down.  

All suppliers are expected to pass the VAT reduction on to all customers, including those on fixed tariffs, as they did with the £150 of costs taken off energy bills announced at the last Budget.

Small businesses who qualify for the domestic energy VAT relief and are not registered for VAT, as well as charities and residential care homes eligible for the reduced rate will also benefit.