Boris Johnson pours cold water over Tory calls to cut VAT on fuel bills… despite his vow that scrapping it could be a Brexit dividend
- Prime Minister Boris Johnson has rejected calls to cut VAT on fuel
- But he insisted another way to ease cost of living would be found by ministers
- Energy firms, Labour and some Tory MPs have pressured to axe VAT on fuel
Boris Johnson rejected calls to cut VAT on fuel last night but insisted ministers would find another way to ease the cost of living crisis.
The Prime Minister, who once suggested that ending the hated tax on domestic fuel would form part of a Brexit dividend, warned the move could prove a ‘blunt instrument’ that would benefit better-off families more than the needy.
But he said ministers would ‘continue to listen to businesses and consumers about how to abate the costs of energy’. Energy firms, Labour and some Tory MPs have piled pressure on ministers to axe the 5 per cent VAT rate on domestic fuel this winter.
Slashing the levy would cost the Treasury £1.7billion and knock around £60 off an average household fuel bill.
Boris Johnson rejected calls to cut VAT on fuel last night but insisted ministers would find another way to ease the cost of living crisis
But with energy prices soaring to record levels in recent weeks, Downing Street said there was no guarantee the move would bring overall bills down. Several Government sources played down the idea.
No 10 also defended the use of green levies on bills to fund renewable energy.
Mr Johnson’s spokesman said: ‘The exposure to volatile global gas prices underscores the importance of our plan to build a strong, homegrown renewable energy sector to further reduce our reliance on fossil fuels.
‘It’s right that we invest in this and ultimately bring down the cost of renewable energy sources while supporting lower-income and vulnerable households.’ Business Secretary Kwasi Kwarteng is holding talks with energy firms to head off further huge price rises.
With energy prices soaring to record levels in recent weeks, Downing Street said there was no guarantee the move would bring overall bills down (stock image)
Experts have warned the energy price cap could jump by £600 – around 50 per cent, when it is updated in April. A Government source said the price cap held back ‘a tsunami of bill increases’.
During the 2016 referendum campaign, Mr Johnson said leaving the EU would allow the UK to cut VAT on fuel.
At the time he suggested that ‘energy bills will be lower for everyone’, adding: ‘When we Vote Leave, we will be able to scrap this unfair and damaging tax.’
Asked about his comments yesterday, he rounded on Labour, saying: ‘It’s slightly paradoxical that this is now being campaigned for by people who actually wanted to remain in the EU and still do when it would be impossible to deliver within the EU.’