MPs call on PM to tackle cost of living crisis

MPs call on PM to tackle cost of living crisis

01/02/2022

MPs call on PM to tackle cost of living crisis by scrapping taxes on fuel bills and green levies – saving up to £200 for average UK household

  • MPs urge Boris Johnson to tackle living crisis by scrapping taxes on fuel bills
  • They have asked PM to slash energy bills VAT and suspend environmental levy  
  • Letter argued removing VAT could save average household £200 on energy bills 
  • Average family face £1,200 hit due to rising gas prices, tax and spiking inflation  

Tory MPs have urged Boris Johnson to help those facing fuel poverty by scrapping taxes on energy bills and green levies amid fears gas and electricity payments will continue to rocket this year.

Around 20 Conservative MPs and peers have asked Boris Johnson and Chancellor Rishi Sunak to slash VAT on energy bills and suspend the environmental levy to ease pressure on consumers.

It comes after utility boss Stephen Fitzpatrick, founder of the Ovo energy company, warned that household energy bills could double to £2,000 by April.

In their letter to the Sunday Telegraph MPs argued that the UK is ‘almost uniquely’ causing energy prices to increase faster than any other comparable country due to ‘taxation and environmental levies’.

Tory MPs have urged Boris Johnson to help those facing fuel poverty by scrapping taxes on energy bills and green levies amid fears gas and electricity payments will continue to rocket this year

 Around 20 Conservative MPs and peers have asked Boris Johnson and Chancellor Rishi Sunak to slash VAT on energy bills and suspend the environmental levy to ease pressure on consumers

In their letter to the Sunday Telegraph MPs argued that the UK is ‘almost uniquely’ causing energy prices to increase faster than any other comparable country due to ‘taxation and environmental levies’ 

‘We hardly need to point out that high energy prices, whether for domestic heating or for domestic transport, are felt most painfully by the lowest paid,’ they stated.

The letter argued that removing VAT on energy bills and environmental levies which fund renewable energy schemes could save the average household £200 on their energy bill.

Organised by Craig Mackinlay, chairman of the Net Zero Scrutiny Group of Conservative MPs, the letter was also signed by former work and pensions secretary Esther McVey and MPs Robert Halfon and Steve Baker. 

Fears of runaway household bills in the new year have been mounting since rising gas prices began bankrupting suppliers in September. 

Since then, they have rocketed from 54p per therm of gas to a staggering £4.50, forcing as many as 26 suppliers out of business.  

Households are expected to see a severe hike in the cost of their energy in April as suppliers are due to increase prices in line with soaring wholesale costs after changes to an industry price cap. 

As a result, millions of households and businesses have been passed on to new providers, so-called suppliers of last resort. 

But energy watchdog Ofgem said it is consulting on changes, which would spread the cost of bailing out the customers of failed suppliers potentially over several years – instead of one larger hit to costs.

Last week, they said it could help to reduce the bills of customers and spare customers a levy of up to £100, according to the Financial Times.

A spokeswoman for the regulator said: ‘Ofgem’s safety net has protected more than four million customers through the unprecedented global gas prices this year, making sure they have an energy supplier and household credit balances are honoured.

‘This comes at a cost, which we always seek to minimise. We, with government and industry, are considering ways to mitigate the impact of these claims on consumers.

Households are expected to see a severe hike in the cost of their energy in April as suppliers are due to increase prices in line with soaring wholesale costs after changes to an industry price cap 

‘This includes exploring options for spreading the cost over a number of years which would help reduce household bills from April 2022, such as via a third party (re)financing option, for which we have published a consultation today.’    

Meanwhile, a report has warned that families face a ‘cost of living catastrophe’ next year thanks to soaring energy bills, tax increases and the highest inflation in 30 years.

It predicts that 2022 will be the ‘year of the squeeze’, with households facing a hit of at least £1,200.

With inflation projected to reach 6 per cent in spring, wages next Christmas could be no higher in real terms than they are today, the study by the Resolution Foundation think-tank forecasts.

It says rising gas prices could add at least £600 to family budgets when the energy price cap is reviewed in spring.

On top of this, households face higher taxes from April when National Insurance goes up by 1.25 percentage points to fund the NHS and social care – a rise that will affect middle-income earners more. 

Most town halls are also expected to put up council tax by almost 3 per cent in the same month.

The think-tank said the combined impact of these factors would leave the average household at least £1,200 worse off – but warned that even this may be an under-estimate because energy bills could rise by more than expected.

Meanwhile, a report has warned that families face a ‘cost of living catastrophe’ next year thanks to soaring energy bills, tax increases and the highest inflation in 30 years 

Some experts have warned that surging wholesale gas prices could add as much as £1,000 to household bills.

Torsten Bell, chief executive of the Resolution Foundation, said: ‘2022 will begin with Omicron at the forefront of everyone’s minds.

‘But while the economic impact of this new wave is uncertain, it should at least be short-lived. Instead, 2022 will be defined as the year of the squeeze.

‘The overall picture is likely to be one of prices surging and pay stagnating. In fact, real wages have already started falling and are set to go into next Christmas barely higher than they are now.

‘The peak of the squeeze will be in April, as families face a £1,200 hit from soaring energy bills and tax rises. So large is this overnight cost-of-living catastrophe that it’s hard to see how the Government avoids stepping in.

‘Top of the Government’s New Year resolutions should be addressing April’s energy bills hike, particularly for the poorest who will be hardest hit by rising gas and electricity bills.’

Although the Resolution Foundation is Left-leaning and is run by a former adviser to Ed Miliband, it employs the Tory former minister David Willetts. Its predictions for the cost-of-living squeeze are in line with those of many other leading experts.

Inflation, which stands at 5.1 per cent now, is expected to peak at 6 per cent in spring, which would be its highest since 1992, with pay packets stagnating as a result. 

Source: Read Full Article