PMQs: Boris Johnson refuses to cut VAT on energy bills despite Brexit promise that he would
ITV News Consumer Editor Chris Choi explains the options available to the government to reduce fuel bills for UK households
Boris Johnson has refused to cut VAT on fuel bills amid a huge rise in the cost of energy, despite promising ahead of the EU referendum that Brexit would allow him to do so.
The prime minister rejected repeated calls from Labour to reduce the tax, in a feisty sparring session with Angela Rayner at PMQs, insisting the government is committed to helping people "throughout the pandemic".
He said the government has taken steps to provide support, including with changes to Universal Credit, the minimum wage rise, and keeping the "country open [and] our economy moving".
Ms Rayner, standing in for Sir Keir Starmer who is in self-isolation after testing positive for coronavirus, said thousands of families face a "disaster" due to upcoming tax rises and rising energy costs.
It has been estimated families will face a £1,200-a-year hit to their incomes as the energy price cap is raised and a 1.25% increase in National Insurance contributions (NICs) comes into effect - both in April 2022.
At the same time rising inflation – forecast to peak in the spring at 0.6% – means that real pay levels are set to stagnate.
"This is an iceberg right ahead," Ms Rayner said, "so will he finally stop and change course ... or will he plough on to what will be a disaster for thousands of families?"
Without "serious solutions", Ms Rayner said, there will be nothing to stop people "falling into poverty or debt" as a result of inflation - working families are "picking up the tab for his incompetence", she added.
Labour's deputy leader said the best way to respond to soaring energy bills would be to cut the VAT on them - something he would have been unable to do inside the EU due to the bloc's competition laws.
Before the 2016 EU referendum, Mr Johnson said: "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."
But instead of fulfilling his pledge, the PM responded by saying Labour "can't be trusted on Brexit".
He said: "She campaigned to remain in the EU. Oh yes, she did. They now have the bare-faced cheek to come to this House of Commons and say that they want to cut VAT on fuel when everybody knows and he did too, everybody knows full well it would be absolutely impossible if they were to do what Labour would do and go back into the EU, remain aligned with the EU single market.
"That is the objective of the Labour Party. They can't be trusted on Brexit and they can't be trusted with the economy."
Mr Johnson listed other ways his government is seeking to help those struggling financially.
He claimed 2.2 million people have been supported with the Warm Home Discounts, worth £140 per week.
Pensioners supported with the £300 Winter Fuel Payments, Cold Weather Payments worth £25 a week for four million people up and down the country. That is what we are doing."
The government has previously acknowledged rapidly rising energy bills will cause “challenges” for Britons after several Conservative politicians wrote to the prime minister, urging him to scrap taxes on them.
“We hardly need to point out that high energy prices, whether for domestic heating or for domestic transport, are felt most painfully by the lowest paid,” the letter said.