Tinkering with VAT on electricity ‘won’t cut it’ for North Shropshire residents, says Helen

North Shropshire MP Helen Morgan says Andy Burnham’s plan to remove the 5% VAT from domestic energy bills does not go far enough to help struggling households.

She has urged the new Prime Minister to back a wider Liberal Democrat package to slash energy bills, including action on heating oil. 

The Government’s scheme to cut the rate of VAT applied to household electricity from 5% to 0%, starting on 1 October would save people around £45 a year. 

Helen Morgan says that measures in the Lib Dems’ ‘Essential Energy Guarantee’ would save the average household more than double this amount.

It would cut energy bills by £100 for the average household in North Shropshire, helping to tackle the cost of living crisis and put money back in people’s pockets.

Under the Lib Dems’ plan, every household would get a basic energy allowance, equivalent to 50% of average energy consumption, at a discounted rate, helping with the cost of everyday essential energy needs like heating, lighting and running medical equipment. 

The MP also highlighted that the Burnham scheme is another example of Labour forgetting about rural counties like Shropshire, where a large number of households rely on heating oil.

The Liberal Democrats are calling for a three-month zero-rating of VAT on heating oil for all domestic users, plus a price cap to shield against sudden spikes.

According to House of Commons Library data, 17.8% of households in North Shropshire are in fuel poverty, struggling to afford their most basic energy needs. This is over 6% more than the national average and shows just how desperate many in rural areas are for Government to recognise the additional challenges they face in heating their homes.

The Lib Dems say their Essential Energy Guarantee plan would save the average household £100 a year, while the poorest 20% would save an average of £140.

Families would receive extra allowances for children, and the most vulnerable - such as people with disabilities or on the lowest incomes would receive the discounted rate on all their energy use.

The Lib Dem scheme would be funded by clawing back £7 billion in unexpected windfall profits from monopoly energy network operators.

Funding for the Burnham VAT plan has already been criticised by a former Labour minister. The government said it would reallocate funds from the now-scrapped Digital ID scheme, but Keir Starmer’s former Chief Secretary Darren Jones took to Twitter to point out that the ID plan was “unfunded”.

Helen Morgan, MP for North Shropshire, said:

“We need to get money back into the pockets of people in North Shropshire, but tinkering with VAT on electricity alone simply doesn't cut it. It is a drop in the ocean compared to the soaring costs families are facing.

“The Liberal Democrat plans for an Essential Energy Guarantee, which includes a three-month cut to VAT on heating oil, would provide immediate and meaningful relief, ensuring that nobody in North Shropshire is forced to choose between heating and eating.

“We may have a new Prime Minister, but Labour’s blind spot remains - they simply do not understand rural Britain. Once again, thousands of households in our community that rely on heating oil risk being left out in the cold.

"Heating your home is not a luxury, it is a fundamental need. It’s a scandal that 7,859 households in our area worry every day about keeping their homes warm.”