Treasury set for £1bn ‘VAT windfall’ from rise in household energy bills


Craig Mackinlay, who chairs the Net Zero Scrutiny Group, said: “This windfall should not be accepted by the Treasury or, if received, it should be targeted at hard-pressed families.”

However, a Treasury source said: “We don’t recognise VAT windfall receipts because as prices go up and consumers spend on energy bills, they’ll spend less on other goods and services. The loss of receipts there will end up netting out the gain of receipts from energy VAT.”

A HM Treasury spokesman said: “There has been no VAT windfall. High energy prices actually reduce VAT revenues – with receipts this year forecast to be £2 billion below the amount collected directly before the pandemic.”

‘Cost of living crisis’

Separately, other Tory MPs suggested that the aid budget should be slashed to ease pressure on families from the expected increase in bills in April.

Robert Halfon, chairman of the education select committee, said: “The £4 billion savings from cutting foreign aid should be put in a redistribution fund to help the lowest paid.

“We’re walking into a cost of living crisis, with every single cost going up.”

Lee Anderson, another Conservative MP, suggested the entire international development budget should be axed in favour of helping hard-up households domestically.

“Scrap the whole foreign aid budget and make it ‘home aid’,” he said. He added that some of the cash could be used to catalyse more extraction of North Sea oil and gas.

“It’s not rocket science,” he said. “If there’s more fuel, it becomes cheaper. We should get it out of the ground here, out of the North Sea. We need to be fully self-sufficient in the UK on fuel.”

He suggested Britain was being “held to ransom” buying gas at soaring wholesale prices because Russia had been restricting supply to the continent, which impacted global markets.

“It’s madness we’ve got it under our feet but are buying it from abroad,” the Tory MP said.

Rishi Sunak, the Chancellor, has cut the aid budget to 0.5 per cent of gross national income, breaking a Conservative manifesto commitment to keep it ring-fenced at 0.7 per cent until the public finances have improved.

The controversial move, which sparked a fierce backbench revolt, came as Government spending on the pandemic response spiralled towards £400 billion.


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