Labour’s ‘stealth tax’ to wipe out April’s £117 energy bill savings | Personal Finance | Finance

A Labour tax freeze will completely wipe out the latest £117 cut in the energy price cap, costing taxpayers an average of £180 across regions, research suggests. In line with Ofgem’s new price cap, the average annual energy bill for a dual-fuel household dropped to £1,641 from £1,758 on April 1, mainly due to the Government removing “green levies” and policy costs. But Brits are set to be hit by Labour’s “multi-billion pound stealth tax grab”, and face an average loss of £200 or more, the House of Commissions Library study, commissioned by the Liberal Democrats.

The party suggested that income taxpayers will see an average hit ranging from £160 to £220 in the 12 months from April, because of Rachel Reeves‘s decision to keep personal tax thresholds frozen. This “completely erases the £117 energy saving”, it added.

“In the worst-hit regions, the Government’s tax threshold freeze will cost households nearly twice the £117 energy bill saving,” the Lib Dems said, “with people in London and the South-east seeing typical tax hikes worth £220 and £200 respectively.”

Liberal Democrat Treasury spokesperson, Daisy Cooper MP, said: “People will understandably feel cheated by this Government, which claims it’s helping just as it hammers them with a multi-billion pound stealth tax grab at the same time.

“Rachel Reeves once rightly accused the Conservative party of ‘picking the pockets’ of working people by freezing tax thresholds, and now Labour is doing exactly the same. These tax hikes show that Labour are just the continuity Conservatives.”

She suggested that the Chancellor was treating every pay rise “as a chance for a tax grab”, adding that her party has a plan to get “Britain growing again via a closer trading relationship with Europe, to fix our public finances fairly and put an end to the cost-of-living crisis”.

Ms Reeves said during her Budget speech in November: “To break the cycle of austerity, we need a fair and sustainable tax system. One that generates revenues to fund the public services we all use and supports investment to grow our economy.

“That does mean that today I am asking everyone to make a contribution.”

She added: “I know that maintaining these thresholds is a decision that will affect working people. I said that last year and I won’t pretend otherwise now.”

The Chancellor insisted wider reforms to the tax system will “make it fairer”, and “ensure the wealthiest contribute the most”.

A Government spokesperson said: “We have the right economic plan – the fair and necessary decisions we made at the Budget mean we can deliver support for families and businesses, including cutting the cost of living.