No Low VAT For Energy-Saving Equipment

Despite Chancellor George Osbourne’s pledge to reduce VAT on energy-saving products by 5-per-cent, Brits will be paying more than they anticipated for solar panels and home insulation after the EU determined that the pledge was in breach of EU laws.

The European Court says that a reduced VAT rate is only applicable for social housing, meaning the VAT rate for energy-saving products will be the usual 20-per-cent.

Despite the EU’s pressuring of the UK to improve its energy efficiency and imposing multiple renewable energy targets, the ruling adds hundreds of pounds to the installation of home insulation and rooftop solar panels.

“People will be aghast when they see the EU on the one hand hectoring member states about carbon reduction while on the other handing down judgments like this,” said Ashley Fox, leader of the Conservatives in the EU Parliament. He added that the ruling “defies common sense”.

David Weatherall, a policy expert with the Energy Saving Trust, fears that the ruling could obstruct the UK from making energy efficient changes as they must pay more to make energy-saving changes.

“This a huge backwards step and we have fully supported the UK’s fight to maintain a low rate of VAT on energy saving products.”

“Cold homes is no niche issue. It is a widespread problem. Our research shows that nearly 40 per cent of households are not warm enough in winter.”

“At the same time the UK is going through a solar revolution with millions of homeowners taking advantage of green energy but an increase in VAT could bring our progress in this area to a grinding halt.”

The Government has recently faced criticism for their energy efficiency efforts. The consumer watchdog Which? recently called for the UK to reform its energy efficiency push, and the Government dropped building energy certificates.

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