New Prime Minister Andy Burnham has announced a cut on electricity bill taxes from 1 October for six months.
The aim is to give people some breathing space and help with the cost of living.
The cut is funded until March 2027. Any further changes will then be announced in the budget.
The cost of the action for this financial year – taken now, before the next price cap – is being funded from the cancellation of the £1.8 billion Digital ID programme.
Cutting VAT on electricity bills is expected to take around £45 off the yearly Ofgem price cap in October.
All suppliers are expected to pass the VAT reduction on to all customers, including those on fixed tariffs, as they did with the £150 of costs taken off energy bills announced at the last Budget.
Small businesses who qualify for the domestic energy VAT relief and are not registered for VAT, as well as charities and residential care homes eligible for the reduced rate will also benefit.
MP Polly Billington has welcomed the announcement saying it will provide welcome relief to households across East Thanet. She says tackling energy costs has been one of her biggest priorities since being elected, and is something she has raised repeatedly in the House of Commons including through her campaign to introduce an energy ‘social tariff’ to cut bills for the most vulnerable households.
Prime Minister Andy Burnham said: “Westminster has not been working for people for too long, with families struggling with the cost of living.
“That needs to change. I said I wanted to give people breathing space, and that’s what I’m announcing on my second day as Prime Minister.
“We’re taking immediate action to cut taxes on energy bills, put more money in people’s pockets and bring back hope.”
Polly Billington MP, said: “The cost of energy is one of the issues my constituents raise with me most often, which is why I’ve been campaigning hard for targeted action to cut bills and put more money back into people’s pockets in East Thanet.
“This is something I’ve raised countless times in the House of Commons, and with Andy personally in recent weeks, so I’m delighted that one of his first acts as Prime Minister is delivering real help for families in East Thanet by slashing energy taxes, cutting bills, and tackling the cost-of-living.”
Today (July 22) the PM has also announced that single bus fares will be capped at £2 from 1 January 2027 for the rest of the year– with maximum fares slashed by a third.
The last £2 fare cap saw an estimated 30 million more journeys taken by bus in just 10 months.
The government says the cap will particularly help passengers in rural and coastal areas to save money, where single fares can be higher while communities have been left behind by insufficient transport links.
This action is funded through £454m that had been set aside for international climate finance projects.
Fares had been capped at £3 until the end of March 2027, but today’s move will stop prices jumping next Spring and lower fares to £2 from January.
Silviya Barrett, Director of Policy and Research at Campaign for Better Transport, said: “Making bus travel more affordable is great news for the millions of people who rely on buses every day. At a time when many households are still feeling the squeeze, lower fares will make a real difference and help more people choose the bus.
“We have long campaigned for more affordable public transport, and a £2 fare cap will provide a convenient, low-cost alternative to driving, helping people save money on fuel and parking while supporting cleaner, less congested communities.”
So a grand total of £22.50 likely to be saved over 6 months, i doubt there’s a single household in the country that could’ t trim their spending to double that saving if they wanted to.
If that’s a big announcement i expect few people are impressed.
Reducing bus fares however will help regular bus users. Though the money to fund it is very vague and apparently includes turning grants to other mations into repayable loans, which does nothing for our current financial position.
Fabulous news about the buses! Shame though on all those local Labour cllrs who were completely silent on Starmer increasing bus fares in the first place.
Tory idea on bus fares ,£1 a week off leccy,WOW!! Helps out no end because will not come into effect until October ,when new price rises start ,and wipes out more than the £1
“Labour put bus price cap back to level it was when they were first elected”
iirc labour previously increased the £2 fare to £3. Could be considered a U-turn.
Why is labour not doing vat discount for gas? Did the gas corporations say, ” No way, T-shirt man “?
No MP news on why the electric cost to consumers is still linked to LNG, the most expensive imported natural gas they can purchase . Anyway, the discounts are some good news. Whoop Whoop
Polly Billington said-how disgusting we have what appears to be somebody with socialist values now leading the Labour Party & looks to be wanting to actually do what our manifesto pledges said.
We thought we had weeded all these types out apart from a dozen or so we keep suspending for trying to help the poorest & that we were all parachuted in Tories pretending to be Labour!
I mean we have spent two years behaving like the Conservatives & freezing the elderly we promised to keep warm, keeping children in poverty until the backlash became too much, double-crossing the Waspis we pledged to help in opposition & promptly deleted all our publicity photos with them when Starmer said we wouldn’t help them after all, attacked the disabled-which I said was a good idea until the inevitable backlash came at us, wasted tens of billions on overseas climate change that makes zero difference, lined our pockets with freebies, taxed people after promising not to, voted against a grooming gangs inquiry until we were forced to U-turn again, tried to force digital id on everybody, censored the internet, tried to cancel local elections like it was Orwell’s 1984 etc.
Who on earth does this guy think he is trying to help the poorest & make the richest carry the majority of the burden as we promised & then stole from the poor to give to our rich donor pals? Who does he think he is scuppering our gravy train of tax avoidance, free concert tickets, free birthday parties, free clothes etc? I shall be writing to my MP-oh I am the MP & the correspondence always seems to get lost at the Royal Mail offices or in the Interwebz portal.
Why not just be pleased he is doing these things for once. If the Tories want to claim the £2 fare cap as their policy, presumably they will also accept that Cameron,May, Johnson ,Truss and Sunak put us where we are today with government debt and covid loan corruption. You can’t have it both ways, by excentuating the positive and ignoring the vast amount of negatives.
Are you still insisting that Starmer’s government didn’t increase fares by 50%?
Yes.
The cap was increased. If there wasn’t a cap, full fares would have been in place, and a 50% increase would have been quite dramatic.
Go back to school.
Polly who