Andy Burnham told he ‘must do more to cut energy bills’ | Personal Finance | Finance

Andy Burnham’s decision to scrap VAT on household electricity bills has been welcomed by anti-poverty campaigners, but they warn much more is needed.

The End Fuel Poverty Coalition, which speaks for a large number of charities and support organisations, said the tax cut was a “positive statement of intent”. However, it said millions of households are still paying an unaffordable share of their income on energy. The Government has announced that the 5% VAT charge on domestic electricity bills will be removed from October 1 until April.

For a typical household, that is expected to be worth around £45 a year – or less than 90p a week. The exact saving will depend on how much electricity a home uses.

Households with electric heating, heat pumps or electric vehicles are likely to save more. However, campaigners warned the benefit could easily be wiped out if wholesale energy prices rise again.

Ofgem is also changing the way it defines a “typical” household from October, making future bill comparisons harder.

Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “Removing VAT from electricity bills is a positive statement of intent by the new administration.

“But it does not address the scale of what households are facing, with millions still left paying an unaffordable share of their income on energy and record levels of energy debt built up over successive winters of high bills.

“The Prime Minister’s next move must be to go even further on bringing down the cost of energy and bringing in increased levels of targeted support for those who need it most: an enhanced Warm Home Discount, reformed Cold Weather Payments and an energy debt relief scheme.

“This breathing space is also not a cure. The only way to bring bills down for good is to change how they are set.

“That means breaking the link between gas and electricity prices, tackling excess profits in the energy industry and ending our exposure to volatile fossil fuel markets through homegrown renewables and more energy efficient homes.”

Although household energy bills have fallen from their crisis peaks, they remain far higher than before Russia‘s invasion of Ukraine triggered the energy shock.

Millions of households also continue to owe suppliers money after building up debts during successive winters of high prices.