Ms Nichols says it will provide ‘welcome relief’ to people in Warrington North.
She says the Labour Government is ‘tackling rising bills’ with a tax cut to remove VAT from domestic electricity bills from October 1st, in time to impact the next Ofgem price cap.
Ms Nichols highlighted that this immediate action applies and is funded for this financial year.
She also highlighted that 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 £1.8 billion digital ID programme.
Any further action, including on funding for longer-term measures, ‘will be taken at the Budget alongside an OBR forecast’. And all decisions at that point ‘will continue to be funded and also consistent with the Government’s fiscal rules’.
Prime Minister Andy Burnham 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.”
Ms Nichols said: “Andy Burnham said this week on the steps of Downing Street that the cost of living and giving people some breathing room would be his priority, and this is a very welcome first announcement towards that which will help with energy costs as we head into winter.”
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.
All suppliers are ‘expected’ to pass the VAT reduction on to all customers, including those on fixed tariffs, as they did with the £150 of costs taken off energy bills announced at the last Budget.
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.
