Rishi Sunak’s Budget ‘won’t cut energy bill VAT’ in £60 a year blow to families

Rishi Sunak is under pressure to cut the VAT on household energy bills and deliver on Boris Johnson and Michael Gove’s Brexit referendum campaign pledge in 2016

Rishi Sunak has already revealed some of what’s to come in the Budget

Rishi Sunak has reportedly refused to cut VAT on household energy bills in Wednesday’s Budget as thousands of British families struggle to make ends meet.

The current rate of five per cent sets households back by about £60 a year.

Labour has called on the Government to make good on a promise made during the Brexit referendum campaign in 2016, when Boris Johnson and Michael Gove vowed to scrap VAT on energy bills if the UK left the EU.

Around two million workers will get a pay rise next year when the National Living Wage is increased from £8.91 an hour to £9.50, it was revealed.

The current VAT rate of five per cent sets households back by about £60 a year


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The Treasury confirmed on Monday ahead of Chancellor Rishi Sunak ’s Budget this week that the increase for all over-23s will take place on April 1.

The 59p hourly boost will mean a full-time worker on the living wage will get a pay rise of more than £1,000 per year, according to the Government.

And about 5.6 million public workers are in line for a Budget pay rise as the Chancellor announced the UK’s economy is “firmly back on track” after the coronavirus pandemic.

Mr Sunak, meanwhile, has been under pressure to cut the VAT on household energy bills, but Treasury sources told the Daily Mail he believed the move would subsidise richer households while doing too little for the poorest.

Scrapping the levy would cost the Treasury around £1.6billion.

Labour’s Shadow Chancellor Rachel Reeves has called on the Government to deliver on Mr Johnson and Mr Gove’s Brexit promise.

She said: “They said it in the referendum campaign so why have they not done it? What more evidence do you need to cut VAT domestic energy bills?

“This is the time to do it when they are soaring so much. The good thing about cutting VAT is it can be done immediately and automatically on bills.

“So people don’t have to apply for it, there’s no bureaucracy to go through and everybody is affected by rising gas electricity bills.”

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