ANDREW LEWER COLUMN: Energy bills must lose the VAT

As I wrote to a Chronicle journalist earlier this month, “Climate change is real and one of our country’s greatest policy challenges of this century, writes Andrew Lewer MP.
Energy bills are expected to rise furtherEnergy bills are expected to rise further
Energy bills are expected to rise further

“I support the overall and ultimate aim of decarbonising the economy.”

I was criticised by an environmental group, based in Brixworth, and a spokesperson from West Northants Labour Party on the back of a story that I had joined colleagues in a letter to the Government.

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This letter asked them to cut VAT and other taxes on energy bills to help with the gargantuan rises in energy bills (Labour has since joined the call to cut VAT on gas and electricity bills).

When the energy price cap is reassessed in April, costs are most likely to increase substantially, putting more financial stress and misery on you, the consumer.

Gas and electricity bills are unlikely ever to return to 2021 prices. On top of VAT, a further 15% of what you pay on your bill are green taxes and they are burning through your pocket.

With the reduction of global coal production to meet climate targets, this means there is greater pressure on gas supply, meaning it will become ever more expensive.

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Just over 20 years ago we were a net exporter of gas. Now we are dependent on gas imports for 40% of our need.

This makes us vulnerable to adversarial states such as Russia, who have been at least partly responsible for the current surge in prices.

The surge has shown the futility of trying to cap energy prices.

Dozens of energy firms were caught in its trap and put out of business, only to be swallowed up by the ‘big six’ energy firms.

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The smaller firms were more competitive on prices. They had to be when taking on their bigger rivals, who, in turn, responded by being more competitive on price.

The price cap strategy that I and my colleague John Penrose MP fought so hard to stop now lies in ruins.

There is no one magic policy wand to make this whole issue go away and to alleviate the financial burdens it brings, but we can make a start.

With rising inflation and the new NHS/Adult Social Care taxation rises, these are exceptional times which call for exceptional responses.

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This is why I want rid of VAT and the green levy to provide a financial breathing space for you, the consumer.

We can get rid of VAT altogether on energy bills because we have now left the EU and are under no further constraint.

I do have real concerns over our climate change policy.

It is currently a high-risk strategy throwing most of our eggs into one basket, with targets that are not only highly likely to be unachievable, given the time scale, but also prohibitively expensive.

We also risk merely looking, but not actually being green by exporting our emissions to carbon-heavy countries like China and India.

We will need to revisit this policy sooner rather than later as fuel cost rises compound problems for those already struggling with their living costs.