I appreciate the concerns raised relating to the VAT treatment of domestic electricity. No-one should be struggling to afford to keep their home at a reasonable temperature in a modern society, and although we have seen progress toward this goal, there is still so much my colleagues and I can do to make this a reality.
Under the Energy Price Guarantee, a typical household will pay no more than £2,500 per year until April 2023. From April 2023, the guarantee will limit bills to £3,000 through to 2024. It comes in addition to the £400 Energy Bill Support Scheme and will support millions of people through a difficult winter and meaning they will not have to face bills of £6,000 this winter. In April, there will be a Treasury-led review into how energy bills are supported going forwards. The objective of the review is to design a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need.
This action is in addition to the £37 billion worth of support introduced earlier this year for households. This includes the £400 payment Energy Bill Rebate for households, and up to £1,200 for households in receipt of qualifying benefits, which will be delivered as planned.
One of the principal ways in which we can tackle fuel poverty in the long-run is to improve the energy efficiency of homes. In the Clean Growth Strategy, the Government set out its aspiration for as many homes as possible to be Energy Performance Certificate Band C by 2035 where cost effective, affordable and practical, and to reach this standard by 2030 for fuel poor homes.
The Warm Home Discount is a key policy in the Government’s programme to tackle fuel poverty and the effects of rising energy prices on low-income households. Launched in April 2011, it has helped over 2.2 million low-income and vulnerable households, including individuals with a disability, each year with their energy costs. The Energy White Paper committed to extending the scheme to at least 2025/26 and the Government is committed to expanding the spending envelope from the current £351 million to £475 million (in 2020 prices) per year, to reach over 750,000 more households in, or at risk of, fuel poverty. Furthermore, later this year the Government will consult on reforms to the scheme from 2022 to better target fuel poverty.
Any decision to modify our tax regime is a matter for the Treasury and careful consideration will be given to any proposed amendments to current VAT rates. I understand that the Government keeps all taxes under review, including VAT. I shall be following the developments on this issue closely, and I will ensure my colleagues at the Treasury are aware of the strength of feeling on this issue.