Household Energy Bills: VAT

Danny Kruger Excerpts

Tuesday 11th January 2022 Commons Chamber

[Danny Kruger (Devizes) (Con)]

Real pressures on the cost of living are obviously coming down the track. I recognise that, and I also note the work that the Government have done and are doing to address it. It is worth noting in passing the contributions made by Treasury Ministers in the last year: reducing the universal credit taper rate and putting £1,000 in the budgets of 2 million low-income families, increasing the national living wage by more than 6.5%, freezing fuel duty for the 12th year in a row, and introducing the housing support fund for lower-income families. However, more clearly needs to be done. The debate has been helpful in identifying some of the options that are open to the Government, including the possibility of a cut in VAT on energy. I note that the Chancellor is considering that option among many others. However, it is worth observing that a cut in VAT on household fuel would disproportionately benefit those with larger homes. I think it is right for the Government to consider it as part of a suite of possible interventions and measures to support families during the current energy price spike.

There is one option that I have not heard mentioned today, although according to news reports last year it was probably being considered then. I refer to the policy of what is called a carbon fee and dividend. The fundamental challenge that we face, given our net zero commitments, is to reduce carbon emissions without hurting low-income families and the economy more generally. One way of doing that is to ensure that as we tax carbon emissions—as we bear down on carbon using fiscal levers—the income that is generated for the Treasury is reallocated directly to families, and to low-income families in particular, in the form of a carbon dividend or climate income, as it is sometimes called. Other countries have been experimenting with this. I accept that it is quite a statist solution and one that might not come naturally to Conservative Members, but I think it is worth considering the option of enabling the income from carbon taxation to go directly to low-income families.

Finally, let me make a point that I think must be made in every speech from the Government Benches. It is very wrong and very regrettable that the Opposition are using the opportunity of a debate on this important matter to propose taking over the Order Paper. I was a spectator in the last Parliament, but I saw very clearly during that terrible time a paralysed Parliament, a Government unable to govern, and the public looking on in bewilderment as their representatives serially failed them and betrayed the promises that they had made in their manifestos—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. We must leave it there.