Energy bills in the UK could be reduced by as much as £200 annually under Budget proposals being prepared by Labour Party Chancellor Rachel Reeves. Central to these plans are measures such as cutting the 5% VAT on gas and electricity and eliminating certain green and policy charges that currently make electricity more expensive than gas.
Ms Reeves is set to present her Autumn Budget on November 26. A coalition of over 50 MPs, MSPs, peers, and charities have supported an open letter urging the Chancellor to shift social and environmental levies off electricity bills and fund them instead through general taxation. This move aims to bring significant relief to households struggling with soaring energy costs.
Sam Alvis, associate director for environment and energy security at IPPR, emphasized the urgency: “The cost of living remains the public’s top concern. A government committed to a ‘war on bills’ can demonstrate its support for working families by taking consistent, tangible actions that make life fairer and more affordable.”
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While a Treasury spokesperson declined to comment on speculative tax changes ahead of the Budget, they confirmed the upcoming fiscal event will focus on priorities such as reducing waiting lists, national debt, and the cost of living.
If implemented, these changes could enable customers of major energy providers like British Gas, EDF, EON, Ovo, and Octopus to see significant savings. However, the exact amount will depend on the specifics of the Chancellor’s announcements and how swiftly energy suppliers adjust their tariffs accordingly.