Where is the money coming from? Ex-Stourbridge MP casts doubt on cut to energy bills

A former West Midland MP has cast doubt on how the Government will fund its cut to energy prices announced by new prime minister Andy Burnham this week.

Suzanne Webb, former MP for Stourbridge, claimed that the Prime Minister’s ‘sums do not add up’.

In one of his first moves on entering Downing Street, Mr Burnham announced plans to scrap VAT on domestic energy bills, which he said would initially be funded with £1.8 billion saved by the scrapping of the Government’s plans for a digital ID scheme.

Miss Webb said that while she welcomed any measure to help families with the cost of living, she wanted answers on how the Government intended to fund the policy.

She said: "Any reduction in energy bills is welcome. However, the Government told the public this VAT cut would be funded by scrapping the £1.8 billion digital ID programme. “That saving will never materialise as it was an unfunded project in the first place, this therefore leaves a significant funding gap for the VAT reduction.

“The obvious question is: where will the money now come from?"

She said one solution would be for the Government to scrap its net-zero subsidies, which would cover the cost.

“The Government is only days into office and is already raising serious questions about its approach to the public finances,” said Miss Webb.

“Responsible government means being honest with taxpayers. If the original funding mechanism has fallen away, ministers must explain exactly how these tax cuts will now be paid for. Simply promising to provide the details later is not good enough."

She warned that announcing tax cuts without a clearly identified funding source risked undermining confidence in the Government's fiscal credibility."

“People support lower taxes, but they also expect government to be transparent and financially responsible. If the numbers no longer add up, the Government owes the public an explanation before asking them to take its promises on trust."