- New Prime Minister takes immediate action to cut taxes on electricity bills to give households in Portsmouth breathing space this winter
- Tax cut this year funded from cancelled Digital ID programme will see VAT on electricity bills removed from October 1
- In one of his first acts as Prime Minister Andy Burnham promises to “put more money in people’s pockets and bring back hope”
Households in Portsmouth across the UK will benefit from immediate action to help with their electricity bills this winter, Labour’s new Prime Minister has announced as one of his first decisions in office.
This follows Andy Burnham’s commitment to the nation on the steps of Downing Street yesterday to give people some breathing space and help with the cost of living.
Local MP Stephen Morgan has welcomed the announcement saying it will provide welcome relief to locals in Portsmouth.
The Labour Government is tackling rising bills with a tax cut to remove VAT from domestic electricity bills from October 1 in time to impact 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.
Commenting, Stephen Morgan, MP for Portsmouth South, said:
“This tax cut will provide relief to Portsmouth’s families, giving them the breathing room that they need on bills and providing them with reassurance over the winter months.
“For too long, too many local people have had struggled with the cost of living as a result of the previous Conservative government’s neglect.
“Households across this city can be reassured that this Labour Government is on their side and will continue to deliver the crucial support that they need.”
Prime Minister Andy Burnham said:
“Westminster has not been working for people for too long, with families struggling with the cost of living.
“That needs to change. I said I wanted to give people breathing space, and that’s what I’m announcing on my second day as Prime Minister.
“We’re taking immediate action to cut taxes on energy bills, put more money in people’s pockets and bring back hope.”
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.
As part of the day one commitment to bring back hope to Britain, the change supports the poorest households, who spend a higher percentage of their income on energy bills.
Energy bills have risen since Russia’s invasion of Ukraine and have been exacerbated because of the war in Iran. But people need support now, which is why the government has acted to provide immediate breathing space for millions of households.
The NI Executive will receive comparable funding to enable it to support NI Households with the cost of living to ensure households across the UK benefit.
