Rachel Reeves will tell Cabinet colleagues she is considering measures to reduce household energy bills as part of her budget response to rising inflation, expected to reach 4% when official figures are announced on Wednesday.
Economists forecast that consumer price inflation (CPI) will have reached double the Bank of England’s target in September, driven up from the 3.8% recorded in August by rising fuel and food inflation.
Speaking ahead of publication of the figures by the Office for National Statistics, a Treasury spokesman said that bringing down inflation was a priority, and the chancellor would convene a meeting of key cabinet colleagues on Thursday to stress its importance across government.
The spokesman specified that action to bring down energy prices was among the options being considered, the strongest indication yet that action on soaring consumer bills will feature in next month’s budget.
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The chancellor is understood to be considering cutting the 5% VAT rate on bills to zero, a move that would save billpayers around £80 a year and cost £2.5bn to implement.
Labour’s manifesto promised it would cut bills by £300 a year, but the last Ofgem price review saw a small increase driven by policy costs, leaving the government under pressure to reduce the impact of domestic energy rates that are the second-highest in Europe.
The spokesman said: “The chancellor’s view is that tackling the cost of living is urgent, and everything is on the table – including measures to bring down energy bills. She’s getting…
