Energy crisis lifeline: Sunak to offer £2,000 VAT cut to slash bills – but there’s a catch

Rishi Sunak outlines government help for ’significant’ price hikes

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An energy industry insider has told that the Chancellor will be briefed by the Department for Business, Energy and Industrial Strategy (BEIS) for a new scheme to help households install heat pumps. BEIS will allegedly float that idea of cutting VAT on installing heat pumps in next week’s new energy strategy.  

The source told that instead of paying 20 percent of the price to instal heat pumps – which would result in a £2,000 levy if heat pumps cost £10,000 to install – the consumer would just get the £2,000 knocked off the bill.

Heat pumps are part of the Government’s plans to create low carbon heating as Boris Johnson aims to reach net zero by 2050.

Set out in the Heat and Buildings Strategy, the Government has been trying to incentivise people to install these systems to replace their current gas boilers.

They claim that this can help slash the UK’s dependency on gas and oil and help avoid soaring energy bills.

But the source was not entirely convinced by BEIS’ idea as he claimed that the only beneficiaries are those who can afford the upfront costs, which is thought to go down to £8,000 from £10,000.

The source told “This is yet another barmy idea from BEIS.

“Instead of helping ordinary families with their energy bills, they want to give huge VAT cuts to those already well-off and able to spend £10,000 on a new heat pump.

“It is simply staggering that this suggestion has got as far as the Chancellor.

“If he gives this the green light, then it shows he has no interest in hard-working families and how they are struggling to pay their energy bills.

“If there was an anti-Robin Hood character, Rishi Sunak would fit the bill. He takes from the poor and gives it to the rich.

“The great irony is that Chancellor is refusing to cut VAT on energy bills for every household as it claims the cut is poorly targeted.

“So instead of getting a VAT cut of £99 for the average householder, a small number of relatively well-off individuals will get a £2,000 VAT cut.”

This comes after the Prime Minister poured cold water on calls to slash the EU VAT, a policy impost on Britain by the bloc back in the 1990S which results in a five percent levy on energy bills.

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The calls came as the nation grappled with a crippling energy crisis, with the energy price cap set to rise by 50 percent to £2,000 in April.

This is the maximum tariff an energy company can charge consumers.

But Mr Johnson claimed that scrapping the measure would not help to slash bills, calling it a “blunt instrument”.

This is despite promising to get rid of the policy when he was campaigning for the Brexit referendum back in 2016.

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