A tax cut on electricity bills from Prime Minister Andy Burnham could be “quickly eroded” if costs rise again in the autumn, the Scottish Government’s energy minister has warned.
Stephen Gethins welcomed the £850 million tax cut announced by the PM – which will mean that from October 1 electricity bills will be VAT free.
The move, announced by the Labour leader in a bid to tackle cost-of-living pressures, will save households about £45 a year, with the cost of the scheme to be funded in part by scrapping Sir Keir Starmer’s digital ID project.
That announcement has been welcomed by the Scottish Government and consumer organisations but they called for further action, with Citizens Advice Scotland (CAS) stressing it was “long past time to rewire the energy system so that everyone can afford to keep the lights on and their homes warm”.
Speaking about the new policy, Scottish Secretary Douglas Alexander said: “Andy Burnham has been clear that from the off that he will put more money in people’s pockets and give people breathing space from the cost of living.
“His decision to cut VAT from household electricity bills will be great news for families up and down Scotland, giving much-needed reassurance on bills this winter.”
Mr Gethins said, with the prospect of further energy bill hikes “causing anxiety” for many Scots, the “early action from the new Prime Minister is very welcome”.
But the SNP minister cautioned that “the £45 saving could be quickly eroded if the energy price cap increases again in October because of international events”.
Mr Gethins said: “Just two years ago, the UK Government came to power promising to cut people’s bills by £300, but they are now almost £300 higher.”
He added that while Scottish ministers “look forward to working with our new Westminster colleagues, we will be pushing for more action on bills from the UK that meets the Scottish Government’s ambition”.
Mr Gethins stressed: “Scotland is an energy-rich country, so nobody should be struggling to pay their bills.
“If the UK Government is serious about devolving more power away from Westminster they would finally put control of Scotland’s energy resources in Scotland’s hands.”
David Hilferty, of CAS, also said that the action to remove VAT from electricity bills was “welcome”, saying how the organisation’s advice network “increasingly supports people where energy has become a luxury commodity, rather than what it is of course – an essential service that all of us need”.
He said: “The early pace on this is hopefully a sign of more to come.
“What needs to follow is action at scale that provides real breathing space in what feels like a never-ending, cost-of-living emergency.
“That means bold and lasting change such as an affordable, social tariff and faster progress on the energy debt relief scheme.
“It’s long past time to rewire the energy system so that everyone can afford to keep the lights on and their homes warm.”
Consumer Scotland chief executive Sam Ghibaldan also called for further action on energy costs.
He said: “This announcement is welcome at a time when many households are struggling to pay their fuel bills.
“However, there remains a strong case for more targeted support for households alongside wider action to tackle the growing burden of energy debt.
“We strongly recommend both UK and Scottish Governments continue to work with us and other key bodies to develop policies that will help households struggling most with the cost of living.”
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