Prime minister says he won't rule out cutting VAT on energy bills as cost of living crisis continues to bite

The Prime Minister has said he would not 'rule out' cutting VAT on energy bills as families continue to feel the squeeze from the cost of living crisis. But he was non-committal when asked if he would slash fuel duty further, following the cut of 5p per litre to help cash-strapped motorists in March.

Speaking in Kigali, Rwanda, where he has been attending a Commonwealth leaders summit, Boris Johnson said the government is doing 'a huge amount' to support people 'with the fiscal firepower we have'. Asked why he had not yet cut VAT on energy bills, he told BBC Radio 4’s Today programme: "I don't rule out that we will do it."

He said the government had 'already cut fuel duty by record amounts', but he acknowledged this would be 'swallowed up' and added: "There may be more that we have to do." Pressed on whether the tax will be slashed further he said: "We want to make sure that those cuts are properly passed on to the consumer."

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He said: "I'm very happy to have an argument about tax and I'm saying some of the things that we’re already doing. But when it comes to energy, and the cost of people’s energy bills, tax is not enough.

"You've got to look at the way the whole thing works. And at the moment one of the problems is that people are being charged for their electricity prices on the basis of the top marginal gas price, and that is frankly ludicrous.

"We need to get rid of that system. We need to reform our energy markets, as they have done in other European countries.

"So that is one of the ways by reforming the market, by changing the way things work, that you can get prices down, you can bear down on costs for people."

REA