Labour presses Government to make energy bills VAT-free during ‘tough winter’

Energy bills should be made VAT-free this winter to “help people through the tough winter months”, ministers have heard.

Labour shadow Treasury minister James Murray told the Commons that cutting VAT on bills to 0% would help people through “low temperatures and high prices” this winter.

The call came as MPs continued to debate the Finance (No.2) Bill, which enacts measures contained within the Budget.

Mr Murray said Labour would not oppose specific measures in the Bill to ensure businesses selling secondhand cars or dentists in Northern Ireland did not suffer due to differing VAT rates.

But he added: “We know that VAT more widely has a significant impact on people’s lives so I end by repeating our call on the Chancellor to cut VAT to zero for domestic energy bills to help people through the tough winter months of low temperatures and high prices ahead.”

Treasury minister Lucy Frazer had said: “The UK has implemented the Northern Ireland Protocol in a way that seeks to protect the UK internal market. Today’s clauses play a part in achieving this objective by allowing Northern Ireland businesses and consumers to have the same economic opportunities as those in the rest of the UK.”

She also said that an “exit charge” for VAT-free zones like the planned freeports would “prevent any abuse of the VAT zero rate” inside them.

Ms Frazer added: “Freeports are an important part of the Government’s levelling up agenda. We see them as central to our goal of sparking regeneration, creating jobs, and inspiring innovation throughout the country.”

Elsewhere in the debate, Labour former minister Dame Margaret Hodge pressed the Government on its plans to tackle financial crime, accusing it of either not understanding or “downplaying” the need to take action on the issue.

Giving an example of how “the impact of economic crime is filtering and seeping through our politics”, she said: “There are two Russian technocrats, Viktor Fedotov and Alexander Temerko, both of whom have questionable backgrounds from questionable origins of their money, who are involved now in a company called Aquind, which is trying to build an energy cable from Portsmouth through to France and it’s a controversial proposal.

“The origins again of the money that they are using to fund this particular project comes … for me is money that has probably been stolen from the Russian people, that is really the origin of where that money comes from.

“What is particularly disturbing is when you look at the accounts of Aquind, the company itself and you look at the donations being given by one of the individuals, the other one hides himself, Alexander Temerko, to Conservative parties and to Conservative members of this House it’s enormous.”

Ms Frazer replied: “I would like to strongly object to her suggestion that the Government is not committed to tackling economic crime, it absolutely is and it’s for that reason that it set out 52 measures in 2019 with its economic crime plan.

“I’m afraid I’d also like to take issue with the suggestion, the implicit suggestion that she made, which I think was highly inappropriate to suggest, that there was some link to the Government’s actions in relation to economic crime and donations which have been made to a number of members.”

Proposals in the Finance Bill would see companies which are regulated for anti-money laundering purposes pay a new tax, with the aim of using the money raised to tackle economic crime.