Labour has accused Boris Johnson of breaking a Brexit promise made during the 2016 EU referendum campaign on slashing VAT from household energy bills.
The prime minister rejected calls for VAT to be removed, arguing it is not the best way to help those who struggle with rising energy costs, and labelling its removal as “a blunt instrument”.
At the same time, he claimed he is not ruling out other measures – but did not say what those might be.
Despite not seeming keen to cut VAT, he took the opportunity to say this week that leaving the EU means the UK can now set its own VAT rates.
“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,” he said.
Whilst arguing against slashing the tax, he said: “The difficulty is that you end up also cutting fuel bills for a lot of people who perhaps don’t need the support in quite the direct way that we need to give it.”
Earlier, Johnson’s spokesperson insisted the reasons for the increase in energy prices are global; and defended the government’s decision to use green taxes to bring down costs for renewable energy, “while supporting lower-income and vulnerable households with their energy bills.”
But predictions show energy bills for millions of households could increase by over 50 per cent in April, when the price cap, which limits the amount energy providers charge, will increase – despite currently standing at a record-breaking £1,277.
According to The Independent, the cap could rise to £1,995 in April, but trade body Energy UK said the government could cut every household bill by £90 by slashing VAT.
During the 2016 EU referendum campaign, prime minister Boris Johnson and levelling up secretary Michael Gove both put their names to a promise that Brexit will mean cutting the ‘unfair and damaging VAT’.
The said: “In 1993, VAT on household energy bills was imposed. This makes gas and electricity much more expensive.
“EU rules mean we cannot take VAT off those bills.
“The least wealthy are hit particularly hard. The poorest households spend three times more of their income on household energy bills than the richest households spend.
“As long as we are in the EU, we are not allowed to cut this tax.
“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 British politicians can do nothing.”
Shadow chancellor Rachel Reeves hit out at the prime minister “going back on his word” on a change which would ‘help burdened households’: “Boris Johnson promised not once but three times to cut VAT on household energy bills during and after the Brexit referendum campaign.”
Related: Flashback to when Johnson and Gove promised lower gas bills
