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Closed Cut the VAT charged on energy bills

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The Government charges 5% VAT on domestic energy. As energy prices have increased dramatically this year, the Government would likely profit from increased VAT takings while people find it harder to pay for their basic needs. We think that is wrong and the VAT should be cut to reduce energy bills.

For the around 15 million customers on standard variable tariffs subject to the energy price cap, the October 2021 increase to the cap could mean £100 million extra collected in VAT (assuming typical usage).

There would be even more VAT collected from people who are forced onto more expensive tariffs, for example when they come to the end of a fixed rate or if their supplier stops trading.

As we have left the EU we are now free to set our own VAT policy and this cut would help everybody.

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  • Related activity

    MPs investigate fairness of energy bills for customers

    A group of MPs called the Energy Security and Net Zero Committee are investigating the process of billing customers for their gas and electricity, and will be looking at whether the rules on charging for energy are fair for all.

    Read the Committee's press notice announcing this work for more information.

    The aims of the Committee's inquiry are to:

    • Determine whether the rules on billing are fair to all consumers
    • To understand what goes into the standing charge and whether that results in a fair contribution from all customers
    • To explore what restrictions there should be on energy companies utilising pre-payment tools
    • To determine how a social tariff might address inequalities

    What happens next?

    The Committee is conducting oral evidence sessions where it will hear from experts in the sector as well as representatives from the Government.

    Their first evidence session will take place on Wednesday 8 May at 10am. You can watch the session live on [Parliamentlive.tv] [7].

    An evidence session is when MPs ask key experts, such as Ministers, academics and/or campaigners, questions on a particular topic.

    These experts are called "witnesses" and they help MPs to gain a deeper understanding of the issue.

    The Committee will then consider all the evidence it has taken and publish a report of its findings with recommendations to the Government on any changes that might be needed.

    For more information about the inquiry, including details of upcoming oral evidence sessions, visit the Committee's inquiry page.

    What is the Energy Security and Net Zero Committee?

    The Energy Security and Net Zero Committee scrutinises the policy, spending and administration of the Department for Energy Security and Net Zero and its public bodies, including Ofgem and the Committee on Climate Change.

    The Energy Security and Net Zero Committee is a select committee.
    - Find out how select committees work

    Get involved in the work of the UK Parliament

    Sign up to the Your UK Parliament newsletter for the latest information on how to get involved and make a difference.

  • Related activity

    MPs investigate energy pricing and the energy market

    The MPs on the House of Commons Business, Energy and Industrial Strategy Committee have been investigating energy pricing and the energy market, including Government support to help people with their energy bills.

    Report on energy pricing and the energy market

    In July the Committee published a report on energy pricing and the energy market. In their report, MPs called on the Government to help the most exposed households by updating its energy bills support. They also called on the Government to consider a social tariff for the most vulnerable customers.

    Evidence session on the cost of living crisis

    Last month the Committee questioned business representatives, unions and consumer groups about climbing energy bills, inflation, interest rates, food and material costs, the impact these trends are having, and how they expect the crisis to develop.

    Select Committee podcast

    The Chair of the Business, Energy and Industrial Strategy Committee, Darren Jones MP, is hosting the current series of the Committee Corridor podcast. This is a fortnightly podcast that brings together Members of Parliament from the different select committees in the House of Commons to interview experts and discuss the most pressing political, social and economic matters facing the UK today.

    The current series is focusing on the cost of living, and in the first episode Darren spoke to the Chief Executive of the Resolution Foundation, and the MPs who Chair the Women and Equalities and Work and Pensions Committee.

    What is the Home Affairs Committee?

    The Business, Energy and Industrial Strategy Committee is a cross-party group of backbench MPs that looks into the work of the Home Office and its associated public bodies.

    The Business, Energy and Industrial Strategy Committee is a select committee. Find out how select committees work.

    Get involved in the work of the UK Parliament

    Sign up to the Your UK Parliament newsletter for the latest information on how to get involved and make a difference.

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    This petition can now be signed.

    If this petition gets 10,000 signatures, government will respond to it.

    If this petition gets 100,000 signatures, it will be considered for debate in Parliament.

    This petition will stay open until 24 March 2022.