Reform to cut £200 off energy bills by scrapping VAT on energy
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VAT on energy bills scrapped, taking around £85 off average bill
Green levy and carbon tax scrapped, further £115 cut Funded
by cuts to quangos Farage launches nigelcutmybills.com draw with
the winner's entire street getting energy bills paid for a
year Reform UK are to announce they will take £200 off the
average family's energy bill in their first budget. Nigel Farage
and Reform's Shadow Chancellor, Robert...Request free trial
Reform UK are to announce they will take £200 off the average
family's energy bill in their first budget. A Reform Government will also scrap a green levy, the Renewables Obligation, from household energy bills, which adds £100 to the average bill. In addition, Reform will scrap the Carbon Price Support tax, which adds £15 to the average bill. Altogether, if Reform wins the next election, £200 would come off the average family's energy bill. As a Reform UK Government will be terminating and unwinding renewables subsidies, removing these policy costs will eventually be cost neutral. In the interim, however, the package will be funded by a 7.5% reduction in the budgets of unprotected quangos, which would save £2.5bn per year in 2029/30. To bring attention to Britain's rising energy prices, Nigel Farage will launch a draw – www.nigelcutmybills.com – where Reform will pay the energy bills of one lucky winner as well as those of everyone else on their entire street. The winners will be announced in two weeks' time. In Opposition, both Keir Starmer and Rachel Reeves supported cutting VAT on energy bills to cut the cost of living. In 2022, they moved a motion in Parliament to eliminate the tax as “something practical that the Government could do right now” to tackle “soaring bills”. The measures proposed by the Government so far in response to the Iran War fall well short of that level of commitment. At a rally in London, Nigel Farage is expected to say: “Labour and the Conservatives have pursued a net zero agenda that has only led to skyrocketing energy bills for working people. “Tax after tax has been added to bills without a second thought given to cost of living - Reform is today putting hard working British people at the centre of everything we do.” Reform's shadow Chancellor, Robert Jenrick, will say: “It's outrageous that as people face soaring bills, the Chancellor is slapping £200 worth of levies and taxes on the price of energy. Reform is on the side of hard-up people, so we will completely scrap the heating tax.”
A 5% rate of VAT is levied on household energy bills. The energy
price cap is currently £1,641, which is representative average
household energy bill. Right now, this would lead to a £78 a year
saving, 1641-(1641/1.05) = £78. However, last October, Britain's
largest energy companies told Parliament bills were set to rise
by a fifth even in a scenario where wholesale costs halved(1).
Reform's VAT cut will thus save households much more than £78 per
year. This measure will cost £2.5 billion per year. Per HM Treasury, the Renewables Obligation (RO) adds £117 to the average household's bill in 2025/6(2). The Government has stated that from 2026/27 to 2028/29, 75% of the cost of the Renewables Obligation will be moved from bills to general taxation. However, the full cost of the RO will return to bills from 1st April 2029. Reform will scrap the Renewables Obligation in full, permanently.
HMT figures show the RO scheme will cost £8.4bn in 2025/26, and
still £6.9bn in 28/29 – 82% of the present figure(3). Adjusting
the present £117 cost to 2028/29 leads to a £96 saving. Carbon Price Support (CPS) is an additional tax on fossil fuels used for electricity generation. It was introduced in 2013 to help increase the level and certainty of carbon prices in the UK (as the ETS price can be volatile). It is applied at the point that fossil fuels are delivered to a generating station. The current CPS rate is £18 per tonne, and has been frozen since April 2016. Removing CPS would save the average household £15(5). Quango is short for ‘quasi-autonomous non-governmental organisation' and for these purposes means non-departmental public bodies that are staffed by public servants who are not formally part of the civil service and which operate at arm's length from ministerial authority. In line with the reforms to the civil service Danny Kruger outlined in December, a Reform Government would demand 74 unprotected Arms Length Bodies (ALBs) find 7.5% of efficiency savings, which would save £2.5 billion a year. This would exclude ALBs like NHS England and Network Rail. Top executives at quangos can earn eye‐watering sums: the Chief Executive of HS2 Ltd earned £617,300 in 2021/22 For example, an NAO report (2024) highlighted that large programmes managed by quangos often rely on expensive consultants. Reform UK's Preparing for Government team is conducting an audit of quangos to decide which ones should be abolished, returned into central government, or maintained as arm's length bodies. These efficiency savings would be achieved in tandem with this restructuring and repurposing. References (1) Energy bills likely to rise by 20% in next four years, says Britain's biggest supplier (2) Budget 2025, p28 (3) Renewables Obligation: Analytical Annex, Table 2 (4) Economic and Fiscal Outlook, March 2026 p55 (5) Cut bills & boost electrification by removing carbon price support, Centre for British Progress |