UK Chancellor Reeves Plans VAT Cut to Reduce Energy Bills

Chancellor Rachel Reeves is preparing proposals to reduce household energy bills as part of the upcoming November 26 budget, with all options on the table including cutting the five percent VAT on domestic energy bills to zero. This VAT cut could save consumers about £86 annually but would cost the Treasury an estimated £1.75 billion, complicating efforts to address a significant public finance shortfall. Alongside this, officials are considering removing green levies that average around £215 per household, though skepticism remains about the feasibility of such measures under current financial and net zero commitments. The government, including Prime Minister and Energy Secretary Ed Miliband, is under pressure to deliver tangible relief amid rising energy costs and growing political competition from Nigel Farage’s Reform UK party, which opposes net zero targets. Downing Street is pushing for concrete energy-saving strategies to be included in the budget while balancing the need to tackle inflation and the cost of living crisis. The cost of energy has become a central political battleground, with contrasting approaches from Labour, Reform UK, and Conservative proposals that favor increased oil and gas drilling.