Liz Truss set to visit Vladimir Putin in Russia 'for talks'
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The Prime Minister is reportedly set to U-turn on his decision not to cut the five percent VAT on energy bills. It comes amid mounting pressure from Red Wall MPs over a cost of living crisis unfolding in the UK. But it also comes as Mr Putin threatens to send bills soaring even higher if he invades Ukraine.
Sources say that Mr Johnson and Chancellor Rishi Sunak will meet this week to discuss the options in a last-ditch attempt to win back key voters.
They are expected to make an announcement before February 7, when the energy price cap is set.
Energy firms, Labour and Red Wall MPs have piled pressure on ministers to axe the VAT rate on domestic fuel this winter.
It was part of a flurry of Brexit benefits that Mr Johnson promised the UK during his 2016 Vote Leave campaign.
He said that slashing the VAT, introduced by the EU, would mean “fuel bills will be lower for everyone”.
But just three weeks ago he appeared to rule out that possibility by dubbing it a “blunt instrument” that would benefit better-off families more than the needy.
Slashing the levy would cost the Treasury £1.7billion and knock around £60 off an average household fuel bill.
A government source last night said the proposed VAT cut has “never not been one of several options| under consideration despite Mr Johnson’s comments, but stressed that no decisions have been made.
Officials are also said to be concerned that Russia will restrict its provision of gas to European countries in the face of Western sanctions should an invasion of Ukraine take place.
Europe relies on Russia for around 35 percent of its natural gas, the bulk of which comes through pipelines including Yamal, which crosses Belarus and Poland to Germany and Nord Stream 1, which goes directly to Germany.
Although the UK is nowhere near as reliant as other countries like Germany it could be indirectly impacted by the rise in wholesale gas.
A rise in gas and petrol prices in the UK as a result of a Russian decision to restrict gas provisions to Europe would only exacerbate Britain’s ongoing energy crisis.
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Ovo CEO Stephen Fitzpatrick said the impact of soaring wholesale gas prices will be ‘an enormous crisis for 2022’, saying families could be hit with £2,000 bills.
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.
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