Robert Jenrick has said Reform UK would strip VAT from energy bills months after the government flirted with the £2bn tax cut, deepening the party’s row with Labour.
The “shadow chancellor” said Reform would strip VAT and green levies from household energy bills if it came to power, thereby saving households an estimated £200.
Party officials argued the tax cut, which would cost around £2.5bn according to Pantheon Macroeconomics, would be paid by a reduction in unprotected government bodies. These quangos include regulators and advisory bodies.
Opposition parties have questioned the lack of detail on which quangos would suffer from budget cuts. Reform UK said it is currently reviewing which bodies would be scrapped under a future government.
It is also launching a prize draw to promote its opposition work, with the winner getting their energy bills paid for by the party. Party officials argue this does not breach electoral rules.
Reports in the lead-up to the Budget suggested Rachel Reeves was prepared to strip the 5 per cent VAT charge from energy bills.
Some economists warned the Chancellor against the move. Tim Leunig, an influential professor at the London School of Economics, said it was a “terrible idea” that would benefit wealthier households.
In recent weeks, Reform UK has also called for the government to reverse a planned hike in fuel duty from September. The Tories have also pressed Labour on the same policy.
Nigel Farage’s party has also argued for the scrapping of renewable energy levies and the carbon price support tax to lower energy bills further.
Jenrick said: “It’s outrageous that as people face soaring bills, the Chancellor is slapping £200 worth of levies and taxes on the price of energy. Reform is on the side of hard-up people, so we will completely scrap the heating tax.”
The Labour government opted to strip some energy subsidies from household bills at last year’s Budget, with the discounts to now be paid through general taxation. The changes are set to take effect in April when the energy price cap is set to drop by £117.
Labour and Reform’s tax attacks
Reeves is under pressure to relieve anxieties among households as oil prices have jumped beyond a threshold that could add a single percentage point to inflation.
The government has so far unveiled a £53m package for rural households that use heating oil, though ministers have hinted at the possibility of greater support being offered to other Britons.
Reform UK’s pivot to the cost of living and energy bills puts direct pressure on Labour to take bolder action.
The two parties have also been embroiled in a row over unpaid tax after the Sunday Times reported on Reform UK deputy leader Richard Tice’s tax avoidance.
Labour Party chair Anna Turley said Tice “knows that the extremes he has gone to in order to pay less tax are anything but normal” through his company setups.
Reform UK officials have hit back at Labour, hitting out at the lack of corporation tax paid by the party’s separate property portfolio.
“The public quite rightly expects consistency between what political parties say and what they do. Greater transparency on this matter would therefore be in the interests of accountability and public trust,” Tice said.
A Labour spokesperson said Tice was attempting to “deflect from his own tax affairs by slinging mud and hoping something will stick”. Fresh company accounts for the year ending in December 2024 are overdue.
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