A Labour motion seeking to force a cut in VAT on energy bills amid concerns over a looming cost-of-living crisis has been defeated in the Commons by Tory MPs.
MPs voted by 319 to 229 — a majority of 90 — against the proposal, with Anne Marie Morris the only Conservative MP to rebel and support the measure.
If the motion had passed the Commons it would have forced government ministers to guarantee time for legislation on a VAT cut to energy bills ahead of an expected hike this spring.
Labour has previously said it would tax North Sea oil and gas companies to pay for the reduction in VAT, which the party said could “save households £200 off their bills, with up to £600 in total for those who need it most”.
After the motion was defeated, Sir Keir Starmer, the Labour leader, said Conservative MP had been given the “opportunity to put families, pensioners and struggling businesses first, with a VAT cut on energy bills”.
“They voted against it,” he added. “Instead of providing security for those who need it the most, the Conservatives are abandoning them”.
Speaking in the Commons, the shadow chancellor, Rachel Reeves, who accused the chancellor Rishi Sunak of being in “hiding”, said the companies had “profited massively because of exploding prices”.
Boris Johnson, whose government is scrambling for a solution over concerns of the cost-of-living, has previously dismissed the option of cutting VAT, describing it as a “blunt instrument” — despite parading the option to scrap the “unfair and damaging tax” during the Brexit referendum.
Earlier this week, however, he admitted more must be done to protect families, especially those on low incomes, from an imminent hike in energy bills, with an extension to the winter homes discount reportedly under consideration.
The increase in consumers’ bills will also coincide with a manifesto-busting hike in national insurance, leading to major concerns, including in Conservative circles, over the cost-of-living.
Echoing the prime minister’s comments in the Commons on Tuesday, Simon Clarke, the chief secretary to the Treasury, said: “No-one in this government is under any illusion about the challenges families are facing with their household finances and we will of course continue to look closely at all the options that exist.”
He told MPs: “The government recognises the pressure that people are facing on their household finances including on their energy bills and we have taken steps already to ease those pressures where and when we can and we will of course continue to look at other things that we can do.
“The reality is that the higher inflation that we’ve seen is primarily due to global factors relating to a large degree to the fallout from the pandemic and to a global spike in energy costs.”
