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We must urgently cut fuel duty and VAT to help struggling households with the rising cost of living

We must urgently cut fuel duty and VAT to help struggling households with the rising cost of living
3 min read

I am acutely aware of the need for warm, safe and affordable homes. National Energy Action, which is the leading charity for fuel poverty and of which I am honoured to be president, campaigns to ensure that everyone can afford to live in a warm home.

Just as the Conservative government led the drive since 2010 to create homes and businesses which are more resilient to floods, the government stepped in at end of May to provide generous support to protect those on the lowest incomes and most vulnerable households from the latest energy price increases.

This support is very welcome and will prevent more falling into fuel poverty than might otherwise have been the case. Though as there are still 6.4 million households in fuel poverty, this is an issue which should command government attention. 

There remains an issue in Northern Ireland which I believe the government would wish to address and that is the fact that no support has been allocated from either the original funds from March or indeed the subsequent measures announced in late May owing to the absence of a functional administration in Northern Ireland. 

The government is directly penalising those reliant on their cars

Further measures which could alleviate fuel poverty in households would be to reduce or remove the green levies on household energy. It is odd that the government is persisting with green levies. Why is energy the only sector where customers are paying for the next generation of infrastructure? This is certainly not case for any other utilities, such as telecoms or water who must raise funds to pay for the infrastructure upfront, not put a charge on each household to pay for it.

Additional measures to insulate homes and make them more resilient to cold and damp would also reduce the number of households in fuel poverty.

The forthcoming Energy Security Bill will be an opportunity to bring new measures forward against the current backdrop of food poverty, fuel poverty and water poverty. There is undoubtedly a certain symmetry here in what has been termed a cost of living crisis.

The spike of global wholesale prices has been compounded in the UK by the fact that
there is gas storage of only 60 days. The war in Ukraine has had a further impact with increasing fuel prices and food prices as well as a disrupted supply chain for food and animal feed. This is not just problem for households but businesses, especially those which are high energy users.

Attention must surely now turn to the fact that the cost of filling a car with fuel has risen to £100, with the cost around £2 per litre. Recognising that 57 pence on every litre goes on fuel duty for both petrol and diesel, with 20 per cent VAT charged on top of that, the government is directly penalising those reliant on their cars.

The impact on rural dwellers is particularly hard where there is sparse and unreliable public transport. The cost of delivering goods is increased, leading to higher food prices too. This can lead in turn to food insecurity with a potential higher dependence on food banks for those in work as well as displaying a certain symmetry between fuel poverty, food poverty and water poverty.

Today, I will press the government in the Lords to address this by reducing the fuel duty and VAT on fuel as a matter of urgency.

It cannot be right that hard-working carers and other key workers on which so many rely are being forced to report sick or leave their employment as they cannot afford to fill up their car to visit those for whom they care.

In the current conditions and seeing the drop in growth announced today, the government will wish to ensure the wheels of the economy keep turning by seeking to introduce such measures as a matter of urgency.

 

Baroness McIntosh of Pickering is a Conservative peer. 

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