Net Zero Watch is calling for the government to take prompt and radical action to tackle the cost-of-living crisis and what threatens to be runaway inflation, now at the highest levels for 40 years, or face a winter of economic, social and political upheaval.
With analysts expecting average household energy bills to rise to £3000 this autumn, millions of households will struggle to pay their bills while 500,000 businesses face going bust, according to the Federation of Small Businesses.
Only swift and radical action will be able to avoid economic calamity this winter.
The government should consider:
** A temporary cut in VAT on all goods and services including energy. This could save each British household as much as £5,700 a year if VAT were reduced to zero, while a smaller and more practical cut to 10% (rather than the full 20%) would offer households an annual saving roughly correspondent to the dramatic increase in energy bills.
** Removing the £10 billion a year green levies from bills, and funding them temporarily from general taxation prior to cancellation and reduction of wind and solar infeed to remove distortions from the energy markets and reduce electricity system management costs.
Rising energy prices are a major component in sharply rising inflation and are closely correlated.
While their direct impact on CPI is obvious, the rising price of energy affects also drives up the costs of all goods and services.
The economic benefits of even a temporary VAT cut for the public finances are significant and undeniable. The radical cut proposed here should be for a maximum of two years and seen as a prelude to detailed debate about the levels and targeting of public spending.
Dr John Constable, Energy Director of Net Zero Watch, said:
The errors in energy policy over the last two decades are so serious and the consequences for British households so grave that only radical remedies will be able to avoid widespread societal distress this winter and in coming years.
A substantial cut in VAT on all goods and services, even if only temporary, would offer significant relief, but necessitates a national debate about levels of taxation and public spending.”
NZW Note: Radical action on energy and VAT is needed to tackle the Cost-of-Living Crisis (pdf)
via Net Zero Watch
June 30, 2022 at 05:56AM
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