Reform has outlined plans to eliminate several levies on household energy bills, aiming to reduce costs for families across the country.
Proposed Changes to Household Energy Bills
The party proposes to abolish the 5% Value Added Tax (VAT) currently imposed on energy bills. This change could result in an average annual savings of £78 for households, based on existing prices. If energy prices continue to rise, the financial relief could be even greater.
Removal of Additional Green Levies
In addition to VAT, Reform plans to remove the Renewables Obligation levy. This charge supports renewable energy projects and is projected to add approximately £117 to household energy bills by 2025/26. Chancellor Rachel Reeves previously indicated that the government would cover 75% of the funding for this scheme until the end of the 2028-29 fiscal year, rather than passing the expense onto households.
- Renewables Obligation Levy: Estimated £117 impact by 2025/26.
- Carbon Price Support Levy: Expected annual savings of £15 per household.
Funding and Cost Neutrality
Reform asserts that these reforms will ultimately balance out. The party plans to fund the proposed energy savings through a 7.5% budget reduction in unprotected quangos. This strategy is anticipated to save £2.5 billion annually by 2029/30.
Quangos, or quasi-autonomous non-governmental organizations, are taxpayer-funded entities not directly overseen by government departments. These include regulators, cultural institutions, and various advisory bodies. Reform is currently auditing these organizations to determine which should be retained, returned to central government, or abolished altogether.
