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In an effort to support the struggling hospitality sector and provide relief to consumers, the Liberal Democrats are urging for a 5% reduction in VAT in the upcoming budget, dropping it from 20% to 15%. Deputy leader and Treasury spokesperson Daisy Cooper emphasized the importance of stimulating footfall in pubs, restaurants, and entertainment venues by making these establishments more financially accessible to the public. Cooper suggested that a windfall tax on major banks, estimated to generate £30bn by 2030, could help offset the cost of the VAT cut.
Recent polling data from More in Common revealed that over half of individuals believe that dining out or visiting a pub has become unaffordable. Cooper expressed concern over the increasing financial strain on households due to high bills and rising food prices, asserting that simple pleasures like a family meal out have become out of reach for many. Meanwhile, Chancellor Rachel Reeves is anticipated to deviate from Labour’s promise not to raise income tax, VAT, or National Insurance in the upcoming budget, but it is unlikely that VAT will be reduced.
Aside from the VAT cut proposal, the Liberal Democrats are also advocating for a reduction in energy bills by approximately £90 annually through the elimination of the main renewables levy. This move is projected to significantly lower energy costs, potentially marking the second lowest level since the 2022 energy crisis. The party predicts that their combined strategy could save an average family £270 per month until April 2027, with an estimated cost of £12bn for the overall package. Furthermore, Cooper proposed allocating a portion of the windfall tax revenue towards establishing an Energy Security Bank to facilitate green energy initiatives.
The call for more affordable energy bills aligns with the broader objective of various political parties to address energy affordability and sustainability. While the Liberal Democrats and Conservatives support discontinuing the renewables obligation, the Green Party and Labour are focused on advancing renewable energy sources to reduce dependency on fossil fuels. On the other hand, Reform UK has proposed a different approach, advocating for the removal of clean energy targets, taxation on renewable energy, and a return to utilizing fossil fuels and fracking. Labour remains committed to expanding renewables to achieve its target of slashing energy bills by up to £300 by 2030 and decreasing reliance on fossil fuels, especially those sourced from countries like Russia
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