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Boris Johnson will consider slashing VAT on energy bills to help struggling families despite appearing to rule it out just three weeks ago.
The measure is one of a number of possible options to tackle the cost of living crisis that the Prime Minister and Chancellor plan to discuss this week.
Earlier this month, Mr Johnson warned that scrapping the disliked tax on domestic fuel could prove a ‘blunt instrument’ that would benefit better-off families more than the needy.
But sources said last night that the option was firmly on the table – although no decisions have yet been made.
Earlier this month, Mr Johnson warned that scrapping the disliked tax on domestic fuel could prove a ‘blunt instrument’ that would benefit better-off families more than the needy
Energy firms, Labour and some Tory MPs have piled pressure on ministers to axe the 5 per cent VAT rate on domestic fuel this winter. Slashing the levy would cost the Treasury £1.7billion and knock around £60 off an average household fuel bill.
The Prime Minister and Rishi Sunak are hoping to meet to discuss the options this week and intend to make an announcement before February 7 when the energy price cap level is set. It is feared bills could rise by 50 per cent from April. A government source last night said the proposed VAT cut has ‘never not been one of several options’ under consideration despite Mr Johnson’s comments, but stressed that no decisions have been made.
Ministers are understood to be increasingly keen for a ‘broad brush’ measure which will help middle-income families as well as those on lower wages.
During the 2016 Brexit referendum campaign, Mr Johnson and Michael Gove pledged to scrap VAT on energy bills if the UK left the EU.
Last night Labour reiterated its call to slash the tax as it warned that a million more disabled people are now ‘trapped in hardship’ and poverty than in 2010.
An analysis of Department for Work and
