Households across the UK will benefit from immediate action to help with electricity bills this winter, after Prime Minister Andy Burnham announced a tax cut removing VAT from domestic electricity as one of his first decisions in office.
The move follows his commitment on the steps of Downing Street to give people breathing space on the cost of living. Government is removing VAT from domestic electricity bills from 1 October, in time to affect the next Ofgem price cap. The measure applies and is funded for this financial year, paid for by cancelling the £1.8bn Digital ID programme.
In Bristol, households will save £45 each — a total of £9,368,775 across the authority’s 208,195 households.
Any further action, including longer-term funding, will be taken at the Budget alongside an OBR forecast, with decisions remaining funded and consistent with the government’s fiscal rules. The VAT cut, from 5% to 0%, is estimated to reduce CPI inflation by around 0.10 percentage points and RPI by around 0.14 percentage points.
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.”
Councillor Tom Renhard, Leader of Bristol Labour, said:
“This government is firmly on the side of families in Bristol. That’s what this cut is all about - real help with the cost of living.
“Here in Bristol, we are already tackling the cost-of-living crisis. We are the only major city to retain a 100% Council Tax discount for the city’s most vulnerable households, and since the start of Mayor Helen Godwin’s Kids Go Free scheme, we have seen over a million free bus journeys for children and young people across the West of England, with children from deprived wards particularly benefiting from it.
“We know people in Bristol are hungry for change – and there is much more to come in the coming weeks. We know that under Andy Burnham Labour has to show it can deliver, and that’s exactly what we will do.”
