Chancellor Rachel Reeves is drawing up detailed plans to bring down UK household energy bills as part of a sweeping Labour economic reset. With the November 2025 Budget approaching, Reeves has told Cabinet colleagues that “all options are on the table” to address the cost-of-living crisis, rising inflation, and the financial strain on millions of families across Britain.
Among the proposals under discussion are cuts to green levies—which currently add an average of £215 to household bills—changes to the UK tax system, and even reducing the 5% VAT on domestic energy bills to zero. Such a move would save the average family around £86 a year, but it would cost the Treasury an estimated £1.75bn annually. Treasury sources have cautioned that such suggestions remain “speculation,” and experts have warned that a blanket VAT cut would be “regressive,” giving the greatest benefit to wealthier households with higher energy consumption.
Tax specialist Dan Neidle stressed that the fairest solution would be targeted subsidies or direct assistance for lower-income families, rather than a broad VAT reduction. At the same time, Reeves faces pressure to balance the books, with a projected £40bn gap in the public finances likely to require significant tax rises. This challenge raises questions about whether Labour can realistically deliver relief on energy bills while maintaining fiscal responsibility.
Prime Minister Keir Starmer, who reshuffled his economic team earlier this month, has tasked three senior advisers with overseeing tax and spending decisions alongside the Chancellor. Meanwhile, Ed Miliband’s Department for Energy Security and Net Zero is being urged by Downing Street to produce credible and affordable proposals that can ease living costs without undermining the government’s climate commitments.
The debate over energy policy has become a fierce political battleground. Nigel Farage and Reform UK have pledged to scrap the government’s net zero target, blaming it for driving up bills and causing deindustrialisation. At the same time, Conservative leader Kemi Badenoch has promised to lift restrictions on oil and gas drilling in the North Sea, echoing Donald Trump’s campaign call to “drill, baby, drill.”
As winter approaches and energy costs remain a central concern for voters, the success or failure of Reeves’s plans could define Labour’s credibility on the economy. The government’s ability to cut bills while tackling inflation and addressing the cost-of-living crisis will also play a decisive role in shaping the next general election. With pressure mounting from both the right and the left, Reeves must deliver a Budget that balances affordability, sustainability, and political confidence.
Credit to : Scope News