Business Secretary Kwasi Kwarteng rules out cutting VAT on energy bills as cost of living continues to rise | Political news

The business secretary again ruled out the prospect of the government cutting VAT on energy bills to provide additional support as the cost of living continues to rise.

Kwasi Kwarteng told Sky News the move would be “quite regressive” as “the wealthy will benefit just as much as the low-income people”.

‘It’s not something the Conservative Party or the Chancellor want to do, they want to have more progressive taxes so the people who need the money are the people who get it,’ he said on Sunday. to Trevor Phillips.

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Chancellor’s measures “impressive”

Pushed again on the prospect of cutting VAT, the business secretary said: ‘It’s up to the chancellor to decide, I’ve spoken to him and it’s not something he’s considering, he had a very comprehensive package last week.”

Mr. Kwarteng defended the measures announced by the chancellor Rishi Sunak Thursday, describing them as “impressive and expansive.”

Mr Sunak said 80% of all homes in England will get a £150 cut on their council tax bill in April, while all domestic electricity customers will get a £200 cut in October on their energy bills.

This last amount will be reimbursed over five years, starting next April, although the housing tax rebate does not have to be reimbursed.

The announcements came after it was revealed that the energy price cap will increase by 54% from April 1 to £1,971 due to soaring wholesale gas prices.

This means energy prices will rise by £693 a year for millions of households who are on their energy supplier’s default tariff.

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Sunak’s plan to tackle fuel costs

Prepayment meter customers will see the price cap increase from £708 to £2,017.

The increases will affect 22 million households.

Read more: What is the energy price cap and why will bills rise so sharply?

The business secretary said he recognized the current situation was a “difficult place” but that rising petrol prices were a “global challenge”.

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‘I leave my coat’ to stay warm at home

Mr Kwarteng added that the price cap “has protected people”.

Labor has called for a reduction in VAT on bills, a windfall tax on oil and gas giants and an increase in the hot house rebate to £400 and extending it to nine million households.

The Chancellor on Thursday rejected calls for a VAT cut and a windfall tax in trade with shadow chancellor Rachel Reeves, describing the latter idea as something “superficially attractive” but risking deterring investment.

Household budgets facing a range of pressures

In addition to rising energy costs, households face pressures in other areas.

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Labour’s Reeves: ‘People are skipping meals to pay energy bills’

The Bank of England Thursday interest rate hike from 0.25% to 0.5%, the first consecutive increase since 2004.

This means higher monthly payments for certain types of mortgages and comes with rising inflation which drives up prices.

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Tesco chairman John Allan told the BBC’s Sunday Morning program that the worst of rising food prices was “yet to come” ahead of a potential 5% rise in the spring.

Households also face a 1.25 percentage point increase in national insurance contributions from April.

The government has come under pressure to drop the latter policy – ​​which will generate revenue to tackle backlogs in the NHS and fund social care – but the Chancellor and Boris Johnson have said they are sticking to it.

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