Martin Lewis explains how to reduce your energy bills
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With Europe in the midst of an energy crunch and Covid cases across the UK on the rise, many Britons fear the nation is walking straight into a winter disaster. The rising cost of wholesale gas has already priced out a number of small energy suppliers since September, and the increased demand for heating in the cold weather is bound to put more strain on the system. To stop the energy crisis from hitting customers squarely in the pockets, a not-for-profit trade body has called on the Government to temporarily cut VAT on gas and energy.
According to Mike Foster, chief executive of the Energy and Utilities Alliance (EUA ), the drastic measure could prevent poorer households from having to make the choice between “heating and eating”.
For those on the price cap, scrapping VAT could save customers up to £65 a year at the present level.
And if bills skyrocket to £2,000, the VAT scrap would be worth £100.
Although not ideal, Mr Foster told Express.co.uk it would go some way towards alleviating the pressure.
He said: “We accept it is not a perfect solution, but it is a good solution in the sense that it gives some respite to rising energy bills.
“For those people on the price cap of £1,277, it can add a £65 reduction in energy bills a year.
“That doesn’t cover how much it has increased by but it’s better than nothing.”
According to a recent poll published by the EUA, 76 percent of those questioned by the trade association were in favour of scrapping the tax.
For comparison, only 11 percent voted against the last-ditch measure.
More importantly, scrapping VAT would fulfil one of the pledges made by the Brexit campaign.
Energy prices soar and EU poses 'joint gas purchase'
Prime Minister Boris Johnson and Michael Gove both promised during the 2016 campaign that “fuel bills will be lower for everyone” as Britain would no longer be tied to the European Union regulations and red tape.
The Prime Minister said: “When we Vote Leave, we will be able to scrap this unfair and damaging tax.
“It isn’t right that unelected bureaucrats in Brussels impose taxes on the poorest and elected politicians can do nothing.”
EU rules stipulate that member states cannot slash VAT on domestic energy below the five percent rate.
Mr Foster said: “They promised to scrap VAT on energy and so in sowing the sort of seeds of division around Brexit, some people would have found that a very good argument.
“And we know it’s popular when it’s cold.
“Three-quarters of the population want to see VAT cut on fuel.
“And so, given it was promised by the Prime Minister and a member of the Cabinet a couple of years ago, in effect, in an election campaign, it would now be the ideal time to fulfil that promise.”
Mr Foster has said there should be enough gas in the system this winter to prevent a full-blown crisis.
However, he understands that many people are fearful about what the upcoming months conditions might bring.
Before the energy crunch, there were more than three million households in fuel poverty across the UK.
By spring, Mr Foster warned there could be as many as five million.
He said: “The expectation is in April the price cap will go up, so it’s a perfectly feasible position to be in, come April 1 next year, for the UK – the sixth richest country in the world – to have five million households in fuel poverty.
“The consequence of that – yes the adage about the choice between heating and eating – but from the GP perspective, the health perspective, having a cold home is enormously damaging for health reasons.”
Health experts have warned about the health risks associated with cold homes this winter, particularly in the wake of Covid and the flu.
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