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.
- 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 Amanda Martin 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 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.
The announcement builds on the Prime Minister’s commitment to
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.”
Local Labour MP Amanda Martin said: “This VAT cut on energy bills will come as welcome relief for families across our community who have faced rising household costs in recent years. Every pound saved makes a difference, helping people keep more money in their pockets and easing the pressure on family budgets.
This is another example of a Labour Government that is on your side – taking practical action to reduce the cost of living and deliver real support where it’s needed most. We are determined to put working people first and ensure families in our area feel the benefit of the change they voted for.”
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.
Chancellor of the Exchequer John Healey MP said: “For too long, too many people have struggled with the cost of living.
“Today’s energy tax cut will give families some breathing room on bills, and provide some reassurance this winter.
“This measure is funded this year from cancelling the Digital ID programme, and it will help bring down inflation while supporting households in every postcode.”
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.
