Millions of British households could see their energy bills reduced by up to £200 per year under new proposals being considered by Chancellor Rachel Reeves.
Key Measures on the Table
The Labour Chancellor is examining two primary approaches to deliver financial relief to consumers. The first involves cutting the 5% VAT rate currently applied to gas and electricity bills. The second focuses on removing green and policy charges from electricity bills, charges which currently make electricity more expensive than gas.
Ms Reeves is scheduled to deliver her crucial Autumn Budget on November 26, where the final decision on these measures will be announced.
Cross-Party and Public Support
The push for bill reform has gained significant momentum. A cross-party group of more than 50 MPs, MSPs, peers, and various charities have united in a joint letter to the Chancellor. They are urging her to cut electricity costs by moving social and environmental levies away from consumer bills and into general taxation.
Sam Alvis, IPPR associate director for the environment and energy security, emphasised the public's priority, stating: "The cost of living is still the public’s number one concern." He added that "small but visible actions, repeated over time, are the best way to prove that government can make life fairer and more affordable."
What This Means for Households
If the Chancellor proceeds with both the VAT cut and the removal of key levies, a typical household could save approximately £200 annually. This would provide direct financial relief to customers of major energy suppliers including British Gas, EDF, EON, Ovo, and Octopus.
A Treasury spokesperson remained cautious, noting: "We do not comment on speculation around future changes to tax policy outside of fiscal events." They confirmed that the upcoming Budget will "focus on the priorities of working people: cutting waiting lists, cutting the national debt and cutting the cost of living."
The exact amount each household will save is not yet guaranteed and will depend on the Chancellor's final announcement and the speed with which energy suppliers pass these changes on to customer tariffs.
