The Dundee councillor behind the city’s cost of living emergency declaration has said a UK Government response to it is “complacent”.
Strathmartine Liberal Democrat Councillor, Daniel Coleman, whose council motion in June received cross-party support, says government action so far is not enough to help Dundonians weather the worsening economic storm.
The council’s local authority chief executive, Gregory Colgan, wrote to Rishi Sunak, then Chancellor of the Exchequer in July.
Included was a call for a reduction in VAT from 20% to 17.5% to save households £600.
No change to VAT rate
But Alan Mak MP, responding in place of Mr Sunak who resigned the same month, stated the UK Government will not make any such rate changes.
He wrote: “Reducing the main rate of VAT would come at significant cost. Each one per cent reduction in the rate of VAT costs the Exchequer around £7 billion.”
“Any loss in tax revenue would have to be balanced by a reduction in public spending, increased borrowing, or increased taxation elsewhere,” Mr Mak continued.
“The rationale for the council’s proposal is noted, however the government currently has no plans to review the main VAT rate at this time,” he added.
It comes as struggling households face even higher bills from October after an 80% increase in regulator Ofgem’s price cap was announced on Friday.
‘Day-to-day prices steepening sharply’
Mr Coleman said the response is disappointing and that citizens need to be protected from the impact.
Mr Coleman said: “The response from the UK Government is complacent. The UK Government has to do a lot more if families in Dundee and across the country are to be helped from the worst effects of the cost-of-living crisis.
“Dundee City Council argued that standard rate of VAT to be reduced from 20% to 17.5% per cent for one year.”
“..the chancellor’s lacklustre spring statement failed to adequately protect local families from soaring bills and the Conservatives’ worsening cost of living crisis,” added Mr Coleman.
“The price of day-to-day living is steepening sharply and it is hugely disappointing that the response from Alan Mak MP, UK exchequer secretary to the treasury seems to fail to understand that.”
He added: “A VAT temporary cut would support the economy by boosting spending on local high streets. The proposals would also be expected to keep inflation down by making the prices of everyday items lower than they would have been.
‘Not fit for purpose’
“The UK Conservative Government is simply not fit for purpose in terms of its poor response to a crisis situation facing Dundee households and people right across the UK.”
He added that the Scottish Government must also do “far more” to increase the number of well-insulated homes across Scotland.
Separate letters from Mr Colgan on behalf of the city council were sent to Scottish Government finance minister, Kate Forbes and Michael Matheson MSP, in charge of the Warmer Homes Scotland initiative.
Scotland’s Deputy First Minister, John Swinney, responded to issues raised in these.
On household heating he wrote: “Home Energy Scotland has given advice to over half a million households over the past five years – and continues to offer interest-free loans and cashback up to £7500 – for renewable heating and £6000 for energy efficiency.”
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