Greg Jackson: My thoughts on Burnham cutting VAT from electricity bills

I’ve had loads of customers asking what Andy Burnham’s cut to VAT on electricity bills means for them, so here are my thoughts about the news and what should happen next.

The VAT move is a positive sign. It will save a typical household about £45 a year and we’ll pass that saving on to your rates the day it comes into effect (even if you’re on a fixed tariff). At a time when the war in Iran is pushing prices up, this cut, plus the government’s move to cut £135 of levies from bills back in April, will give British households some relief. Despite that, the war is still likely to push prices up (we expect about a 2-3% rise in October), but they would have risen more without these changes.

I always read the comments on my videos to get a better sense of what you’re all thinking…and some of them look a bit like: “£45 isn’t enough! Drop standing charges! They’re too high!”.

I couldn’t agree more. Standing charges are too high. They keep creeping up because the grid gets more and more expensive to run and upgrade. We’re fighting hard for systemic changes to bring the base costs down. While we fight, there are plenty of ways we can help individuals so if you’re struggling, do reach out. We offer help and standing charge holidays through our Octo Assist fund.

But we should celebrate the fact that today’s news is a big step in the right direction. It shows that the government are listening and taking the problem of high electricity bills seriously right out of the gate. This is (I hope) an important sign that bringing your bills down is a big priority for them.

There’s so much more to do. We must stop letting expensive gas dictate the price of cheap renewables and stop wasting billions on outdated grid monopolies when we could be investing in smart, local tech in people’s homes. We should also remove the distorted levies on electricity.

Making these common-sense changes could easily knock another £200 off everyone’s bills. Read more about this.

And whatever we do to bring electricity prices down will make it even more of a no-brainer for customers to shift to cleaner, better heating and driving too.

Proper reform of the electricity market will bring bills down for hard-pressed households and businesses too. While the required reforms might annoy a small number of bloated companies in the energy sector, they would be hugely positive for hundreds of thousands of companies who need it.