Cut green taxes, Prime Minister, to offset cost of living ‘catastrophe’ as heating bills soar – Bill Carmichael

Boris Johnson is under pressure to act over the energy crisis.Boris Johnson is under pressure to act over the energy crisis.
Boris Johnson is under pressure to act over the energy crisis.
IN the next few months millions of families across the UK will face what has been described as a “cost-of-living catastrophe” driven by rising taxes, rising prices and rising energy costs.

This Conservative government trashed its reputation as a “low tax” administration by hiking up National Insurance contributions in April, in a move that will hit the working poor particularly hard.

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At the same time inflation is running at well over five per cent, effectively wiping out the rises in wages that were one of the key benefits of Brexit.

Should green taxes be scrapped to counter fuel poverty?Should green taxes be scrapped to counter fuel poverty?
Should green taxes be scrapped to counter fuel poverty?

And gas and electricity costs will rise by something like 50 per cent directly as a result of the rank stupidity of our current energy strategy. We have run down cheap and reliable coal generation for environmental reasons, but we have not replaced this capacity with nuclear generation or domestically produced fracked gas.

So we are increasingly reliant on imported gas on the volatile international market, where prices have rocketed in recent months.

As a result of this perfect storm hitting the UK in the next few months, families could find themselves £1,200 a year worse off, according to the Resolution Foundation think tank.

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The rise in energy prices is particularly worrying. Already tens of thousands of poorer pensioners die every year because they are unable to heat their homes properly. This figure is sure to rise steeply if nothing is done to mitigate rapidly rising prices.

Labour deputy leader Angela Rayner, speaking at Prime Minister's Questions.Labour deputy leader Angela Rayner, speaking at Prime Minister's Questions.
Labour deputy leader Angela Rayner, speaking at Prime Minister's Questions.

High energy prices hit poorer people harder because they spend more of their income on gas and electricity than richer families.

Putting it bluntly, many older people will be facing the bleak choice of whether to “eat or heat”, but not both, in the coming months.

One partial solution, suggested by a group of Conservative MPs in a letter to the Prime Minister, and by Labour’s Deputy Leader Angela Rayner in the House of Commons this week, is to cut the five per cent VAT on energy bills – a move that was prohibited by the unelected bureaucrats of Brussels when we were members of the EU.

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Incidentally, isn’t it marvellous that Labour have finally understood that one of the key benefits of Brexit is that we now have control over our own taxation policy once again?

Another partial fix would be to scrap or suspend the plethora of “green” taxes on energy costs that add about £195 a year to the average bill.

This would be an awkward move for Ministers particularly after Boris Johnson invested so much time and political capital in the COP26 climate change conference in Glasgow.

But there is no evidence whatsoever that green taxes contribute anything to the fight against global warming. In fact, according to a report from the National Audit Office last February, the Treasury and the HMRC don’t even bother to check whether green taxes impact on climate targets.

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In the longer term, we need a change of energy policy. We should temporarily return to burning more coal, while we rapidly build up carbon-free nuclear power and domestic fracked gas capacity. This would free us from the vagaries of the international gas market. There is no reason why the UK should not be self-sufficient in our energy needs.

Other possibilities include increasing the one-off £140 Warm Homes Discount payment that people on certain benefits can apply for.

The truth is that even if you add all these together the likelihood is they will be dwarfed by the rises in energy prices. But the Government must do something to help poorer people cope this winter. It is not only the morally right thing to do, it is also politically the right thing to do.

I am increasingly convinced the next election will be won and lost on the economy – jobs, wages, prices and taxes.

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By May 2024, when the election is likely to take place, COP26 will be a distant memory and voters won’t care a jot about whether some civil servants enjoyed peanuts and prosecco at a party in Westminster four years ago.

What will matter are questions such 
as: do I have a job, have my wages gone 
up, are prices stable, how much tax am 
I paying, can I afford to feed my family, can I afford to heat my home in the winter?

The political party with the best answers to those questions will win the election and form the next government.

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