𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

A powerful think tank with the ear of the Government has recommended scrapping levies which are forcing up energy bills. The Government should use £2.5billion of VAT raised from energy bills to subsidise electricity, according to the Institute for Public Policy Research (IPPR).

Pushing for the removal of levies, it states: “The Climate Change Levy on energy generation is not driving decarbonisation, while the incoming levy on hydrogen will not benefit growth or consumers.” The IPPR claims energy bills are 50% higher since 2021.

It has also put forward a host of proposals to tackle the wider cost of living crisis. It calls for companies which shrink the size of products without cutting prices to be publicly shamed. Radical action is needed to tackle the scourge of “shrinkflation” as part of a “war on bills”, it argues.

It wants companies to be forced to stick labels on products if they are guilty of shrinking the size.

The think tank is also pushing for smaller convenience supermarkets to be required to stock cheaper non-brand items. It argues larger supermarkets should have to make discounts available to all customers and not just members.

The IPPR says Labour should make bringing down the cost of living the “defining mission” in the years running up to the next election. With Labour struggling in the polls, it argues a “relentless war on bills” is the way to rebuild trust.

Its research found food prices have gone up by 35% since 2019. Polling showed energy and food costs are the “top two expenses causing financial stress”.

The think tank’s Sam Alvis said: “The cost of living is still the public’s number one concern. A government that declares a ‘war on bills’ – and means it – can show it’s fighting on the side of working people.”

Matthew Lesh of the Institute of Economic Affairs (IEA) said the IPPR had missed important factors behind the cost of living crisis, saying: “They have entirely failed to highlight the key drivers of higher costs for businesses, namely, increases in national insurance and the minimum wage. Instead, the Left-wing think tank focuses on tangential issues and proposes policies that would be, at best, ineffective and, at worst, counterproductive.”

Shadow Treasury minister Gareth Davies said: “Rachel Reeves has sent prices soaring with her business tax hikes. Since her last Budget, inflation has doubled and 180,000 people have lost their jobs, and she is about to make things worse at the next Budget with more tax raids. Meanwhile Ed Miliband’s Net Zero fanaticism has sent energy bills up, despite him promising to slash them.

“The best way to tackle the cost of living is to get inflation under control and reduce the burden on small businesses so they can grow the economy. That’s why the Conservatives will abolish business rates for 250,000 high street firms and reverse Labour’s damaging family business taxes.”

A Treasury spokesperson said: “We do not comment on speculation around future changes to tax policy outside of fiscal events. The Budget later this month will build stronger foundations to secure Britain’s future and focus on the priorities of working people: cutting waiting lists, cutting the national debt and cutting the cost of living.”