Martin Lewis implored the Government to do something for the most vulnerable in the UK as energy bills are expected to soar in a few weeks time after the price cap is raised. Mr Lewis listed off a variety of programmes the Government could introduce to help the neediest but was sceptical about Labour’s proposed VAT cut. The money expert believed the VAT cut could be used to fund support policies he laid out so people are not without warmth for the coming year and branded the cut a “blunt tool”, but conceded it was still a tool to be considered.
Speaking on BBC Politics Live, Mr Lewis discussed the rising energy costs which are due to hit in April and looked at what the Government could do to ease the burden off the public.
He told the programme: “Now we know that first price cap will last from April until October.
“In that six month period, on average people, vulnerable people and those on lower incomes are going to need £300 just to keep them in the expensive position that they are in right now.
“And unfortunately, it’s likely rates are going to go up again next October so even more will be needed…
“Now I know Labour has the VAT policy, I think that’s a bit of a blunt tool because it helps everyone in a way.
“You could argue that you would be better off to keep the VAT and use the money from that to pump it towards the people who will simply be choosing between whether they freeze or they starve and that is not an exaggeration in some homes.
“We are in that position, the mechanics of how you do it, by the way, don’t really matter.
“Expand the warm home discount and pay £300 there, do it through Universal Credit, have a vulnerable customer price cap. None of it matters, you just got to do it.”
Labour has proposed cutting the 5 percent VAT on energy bills to help the population get through the rise of their utility bills over the next year.
The amount saved from the cut depends entirely on the tariff and energy uses but Ofgem says the average yearly energy bill is around £1,277.
The VAT on that is £61 a year with a large portion of the costs being wholesale and network expenditures.
Mr Lewis says the price cap – which he calls a “rate cap” as it defines how much companies can charge- is expected to rise by over 50 percent after April.
Ofgem will review and publish how much the price cap will rise in February.
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