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Those living in poverty hit harder by energy bills, Labour analysis shows

·3-min read
Analysis from the party found the poorest 10% of households pay on average £756 a year per person for electricity, gas and other fuels (Steve Parsons/PA) (PA Wire)
Analysis from the party found the poorest 10% of households pay on average £756 a year per person for electricity, gas and other fuels (Steve Parsons/PA) (PA Wire)

Those living in poverty are paying more on average for their gas and electricity than those who live more comfortably, Labour has said.

Analysis from the party found the poorest 10% of households pay on average £756 a year per person for electricity, gas and other fuels.

Labour said this was an extra 50% above what the richest households pay, at £504 per person on average, and more than the national average at £530.

It comes after shadow chancellor Rachel Reeves said on Sunday that if Labour was in power, the cost of living crisis would be at the centre of Wednesday’s Budget.

Labour’s Wes Streeting called for VAT to be cut on domestic energy bills for six months (Gareth Fuller/PA) (PA Wire)
Labour’s Wes Streeting called for VAT to be cut on domestic energy bills for six months (Gareth Fuller/PA) (PA Wire)

The figures also showed those in poverty pay a much higher proportion of their household budget on energy bills, with the poorest households spending seven times as much of their budgets on energy as the richest households, and three-and-a-half times the national average.

Wes Streeting shadow child poverty secretary, said: “The Conservatives are leaving working families to pay the price for the chaos in our energy sector, with the poorest being hit the hardest.

“Boris Johnson ought to be getting a grip on the cost of living crisis, but instead he’s making it worse with his jobs tax and the £1,000-a-year cut to Universal Credit.

“That’s why Labour are calling on the Government to urgently cut VAT on domestic energy bills for six months, to help people through this winter.

“Labour’s plan to insulate millions of homes would ease the pressure on households, making bills cheaper and homes warmer.”

Meanwhile, the Liberal Democrats called for a windfall tax on gas producers profiting from record-high prices to help support struggling households and businesses this winter.

The Lib Dems said that wholesale gas prices had risen from 56p/therm during the first half of the year to 150p/therm and are now reaching 300p/therm.

This windfall tax would raise vital funding to insulate people's homes, slash energy bills and protect skilled jobs

Sir Ed Davey, Liberal Democrat leader

Before that, natural gas prices had never reached 100p/therm.

The party said Serica Energy, a North Sea gas company responsible for 5% of the UK supply, had already stated it expects “significant returns” due to the increase and that Serica’s share price had surged from 156p per share at the end of August to 232p on Wednesday.

Sir Ed Davey, leader of the Liberal Democrats and a former energy secretary, said: “Fossil fuel companies are raking it in hand over fist through this gas crisis. The least they can do is pay a little more in tax to help struggling families get through the winter.

“This windfall tax would raise vital funding to insulate people’s homes, slash energy bills and protect skilled jobs.

“If Rishi Sunak is serious about tackling both the climate emergency and the cost of living crisis, he would introduce this one-off tax.”

A Government spokesperson said: “Protecting consumers is our top priority which is why our energy price cap will remain in place. We are also supporting vulnerable and low-income households further through initiatives such as the £500 million Household Support Fund, Warm Home Discount, winter fuel payments and cold weather payments.

“Domestic fuels such as gas and electricity are already subject to the reduced rate of 5% of VAT.”

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