Rishi Sunak dodges calls to slash VAT on energy bills to help with soaring costs

RISHI Sunak has dodged calls to slash VAT on energy bills, despite households facing a quadruple whammy of rocketing prices.

The Chancellor was under pressure to scrap the 5% VAT charge on heating bills to help out families struggling to pay soaring energy costs.

But the cut will not be happening, after Mr Sunak failed to announce the move in his speech to the Commons earlier today where he unveiled his plan to help struggling families make ends meet.

It comes as the energy price cap rose to a record £1,971 a year, hitting 22million households.

And prepayment customers will see an increase of £708 from £1,309 to £2,017.

That's because the energy price cap - which limits how much suppliers can charge for default tariffs - is based on the price of wholesale energy and supplier costs.

But this has soared in recent months, and prices have been passed onto consumers - creating huge hikes in gas and electricity costs.

It means the cap has soared by 54%, more than was predicted by analysts.

However, Mr Sunak did say the government would take action on energy bills and provide help for millions of families.

He said this morning: "Without government action, this [the price cap increase] would be incredibly tough for millions of hard working families. 

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"So the government is going to step in to directly help people manage those extra costs."

Households will get up to £350 a year to help pay for energy bills under the Chancellor's £2.5billion plan to tackle the cost of living crisis.

He also announced a £150 rebate on Council Tax for households on band A to D, which eligible households will receive in April.

But despite the measures announced, scrapping VAT on energy bills would have made them more affordable for households to pay, and even Boris Johnson previously warmed to the idea of a cut.

It comes as households suffered another blow to their finances today as interest rates were hiked to 0.5%.

When the Bank of England raises interest rates, the cost of borrowing increases.

This means that consumers and businesses have less money to spend, and in theory, as demand for goods and services fall, so should prices - and you could be paying more for financial products.