Reform pledges to scrap VAT and green levies on energy bills

Reform UK has promised to scrap VAT and green levies on household energy bills if the party wins power.

It said the move would save the average family £200 a year.

There has been a renewed focus on energy costs since the outbreak of the war in Iran, with fears a sustained rise in the price of oil will lead to a surge into household bills.

The government has already announced that from April some levies will be scrapped or funded from general taxation, leading to a fall in energy costs for a typical household. However, bills could rise again in July when the cap on energy bills is reset.

Separately the government has announced £53m of support for "vulnerable" households using heating oil, whose energy prices are not capped like consumers who use gas and electricity.

Reform has also launched a prize draw to promote its announcement, with the party promising to pay the energy bills of the winner and their entire street, up to a maximum value of £3,500 per property.

The terms and conditions of the competition state that Reform "may determine what constitutes a 'street' or group of residences in its reasonable discretion".

A party spokesman said the competition did not breach electoral law.

"If people think there is anything improper in this, they should report us. They won't because there isn't," he said.

At a rally in London, Farage said: "Labour and the Conservatives have pursued a net zero agenda that has only led to skyrocketing energy bills for working people."

Reform's Treasury spokesperson, Robert Jenrick, said: "It's outrageous that as people face soaring bills, the chancellor is slapping £200 worth of levies and taxes on the price of energy."

VAT is currently set at 5% on household energy bills. Reform said scrapping the levy would save the average household £78 a year based on current prices but if prices increased the savings would be higher.

Reform said it would also remove the Renewables Obligation levy - which helps fund renewable energy projects - in full from household energy bills.

In her Budget last year, Chancellor Rachel Reeves said the government would fund 75% of the scheme until 2028-29, rather than adding this cost to energy bills.

The Treasury estimated the levy added £117 to the average household energy bill in 2025/26.

Reform has also promised to scrap another green levy - Carbon Price Support - which it said would save the average household £15 a year.

Farage said Reform would remove the Renewables Obligation entirely, rather than paying for it via central government.

Asked if that would damage the confidence of investors in renewables projects, Farage said: "We want foreign investment, we want inward investment... but it has to be on projects or sectors that can make money without making old ladies' energy bills more expensive than they should be and de-industrialising the base of our country.

"Some people have been sucking on the teat of taxpayers' money for far too long. But you know what? It ends with us."

Reform UK said its policies would eventually be cost neutral as a Reform government would be terminating and unwinding subsidies for renewables.

However, in the short term it said the package would be funded by a 7.5% reduction in the budgets of unprotected quangos, which it said would save £2.5bn a year in 2029/30.

Quangos - or arm's length bodies - are organisations such as regulators, cultural institutions and advisory bodies which are funded by taxpayers but not directly controlled from Whitehall.

Reform said the party was conducting an audit of quangos to decide which ones should be abolished, returned to central government or retained in their current form.

Responding to Reform's announcement, Liberal Democrat Leader Ed Davey said: "Nigel Farage cheered on Trump's illegal war on Iran that is sending petrol prices and energy bills through the roof. Now he says he wants to cut your energy bills.

"This is just Farage's latest con. Just like Brexit, he peddles his lies then leaves the British people to pick up the tab."

In recent weeks Reform has made a number of announcements focused on the cost-of-living, including calling on the government to reverse a planned hike to fuel duty.

The Conservatives have also promised to cut renewable energy subsidies, while scrapping net zero targets.

Shadow chancellor Sir Mel Stride accused Reform of copying the Tories' plans.

"The only original thinking they seem capable of is to pile up ever more unfunded promises," he added.

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