HOUSEHOLDS in Pembrokeshire and across the UK will benefit from action to help with their electricity bills this winter, Britain’s new Prime Minister has announced as one of his first decisions in office.

This follows Andy Burnham’s commitment to the nation on the steps of Downing Street to give people some breathing space and help with the cost of living.

He said: “Westminster has not been working for people for too long, with families struggling with the cost of living. That needs to change. I said I wanted to give people breathing space, and that’s what I’m announcing on my second day as Prime Minister. We’re taking immediate action to cut taxes on energy bills, put more money in people’s pockets and bring back hope.”

Local MP Henry Tufnell has welcomed the announcement saying it will provide welcome relief to locals in Pembrokeshire:

“I know just how hard it’s been for so many people across Pembrokeshire struggling with high energy bills. It is fantastic to see immediate action from our new Prime Minister, focused on making life easier for people in Pembrokeshire. Cutting VAT on electricity will bring welcome relief to local families and shows that we have a Labour government on our side, taking swift action to ease the cost of living.”

The Labour Government is tackling rising bills by removing VAT from domestic electricity bills from October 1 in time to impact the next Ofgem price cap. This immediate action applies and is funded for this financial year.

The cost of this immediate action for this financial year – taken now, before the next price cap – is being funded from the cancellation of the (£1.8bn) Digital ID programme.

Any further action, including on funding for longer-term measures, will be taken at the Budget alongside an OBR forecast. All decisions at that point will continue to be funded and also consistent with the government’s fiscal rules.

Cutting VAT on electricity bills is expected to take around £45 off the yearly Ofgem price cap in October. This is on top of the £150 removed from bills at the last Budget.

By targeting electricity bills, the government is helping to keep inflation down. All suppliers are expected to pass the VAT reduction on to all customers, including those on fixed tariffs.

Small businesses who qualify for the domestic energy VAT relief and are not registered for VAT, as well as charities and residential care homes eligible for the reduced rate will also benefit. 

Chancellor of the Exchequer John Healey MP said:

“For too long, too many people have struggled with the cost of living. Today’s energy tax cut will give families some breathing room on bills, and provide some reassurance this winter. This measure is funded this year from cancelling the Digital ID programme, and it will help bring down inflation while supporting households in every postcode.”

As part of the day one commitment to bring back hope to Britain, the change supports the poorest households, who spend a higher percentage of their income on energy bills.