Anna Sabine MP for Frome and East Somerset welcomes Party’s plan to slash energy bills and put money back into people’s pockets.

Anna Sabine MP for  Frome and East Somerset welcomes Party’s plan to slash energy bills and put money back into people’s pockets. 

Lib Dem MP, Anna Sabine has today welcomed the Lib Dems plan to cut energy bills by more than £90 a year. 

Announced in a speech today, Liberal Democrat deputy leader and Treasury spokesperson, Daisy Cooper called on the chancellor to reduce household energy costs in the upcoming budgets by removing a currently existing levy. 

At the moment included in electricity bills, is a ‘renewables obligation’ levy which if scrapped, would cut the typical energy bill by more than £90 per household. 

“I really welcome the Lib Dem plans for real change to combat growing costs of living. People across Frome and East Somerset are struggling with household bills that keep rising, with no end in sight and definitive changes need to be made by the Government to help tackle this.” said Anna Sabine MP for Frome and East Somerset today. 

“This plan would help put money back into the pocket of residents in my constituency, some of whom are having to choose between heating and food, a frankly barbaric circumstance that has no place in modern society”.

Anna has previously held Cost of Living surgeries across the constituency, bringing together different groups to provide advice to residents concerned about rising costs and will continue to fight for residents and businesses of Somerset.

“Not only would this move help individual households who under pressure, but it would help local businesses who are also feeling the weight of extra costs on top of increases to employer’s NI, as well as freeing up cash for people to spend in the high street, on meals out, cinema trips, reinvigorating the local economy”.

ENDS

Notes to Editor: 

Bank windfall tax

The Liberal Democrats have previously called for a time-limited windfall tax on big commercial banks, originally proposed by the IPPR think tank. It would only target the “windfall” interest payments received by commercial banks as a result of the QE-related reserves they hold at the Bank of England. Those interest payments to the banking sector are currently funded by the taxpayer. The tax does not involve any change to the way in which the Bank of England conducts Quantitative Tightening (QT). It would expire when base rate returns to 2%, or when the QT programme concludes - both of which are expected to happen after 2030. IPPR’s proposals can be found here. The bank windfall tax would raise around £30bn in total between November 2025 and April 2030.

Emergency support package

The emergency support package proposed by the Liberal Democrats would be temporary, coming into effect immediately in November 2025 and expiring at the end of the next financial year, in April 2027. It would cost £12bn in total and would be funded by the bank windfall tax.

The package would be made up of two policies:

1. Cutting VAT on hospitality, accommodation and attractions from 20% to 15% for 17 months, as an immediate boost to high streets. According to Liberal Democrat analysis of HMRC figures provided by the Government in a written Parliamentary Question, this would cost around £7.5bn in total between November 2025 and April 2027.
2. Removing the “Renewables Obligation” (RO) levy from people’s energy bills and instead funding it through the bank windfall tax for 17 months. Based on Liberal Democrat analysis of figures published by Nesta (please see page 4 of this policy paper), this would cost £3.2bn a year, equivalent to around £4.5bn between November 2025 and April 2027. By April 2027, the Government should develop a new way of funding RO contracts, implementing Liberal Democrat proposals to move them onto the “Contracts for Difference” model.

Hospitality includes businesses such as pubs, restaurants, bars and cafes. Accommodation includes businesses such as hotels, inns, boarding houses, BnBs, caravan pitches and rented holiday homes. Attractions include businesses such as theatres, cinemas, fairs, amusement parks, concert venues, zoos and exhibitions.

Household savings

The party estimates that the two policies would save UK households an average of £270 in total between November 2025 and April 2027.

Liberal Democrats expect around 50% of the VAT cut for hospitality, accommodation and attractions to be passed on to consumers, delivering an average saving of around £135 per UK household in total between November 2025 and April 2027. 50% pass-through is in line with what happened in the accommodation and food service sector during the 2008 VAT cut [HMRC p86].

According to figures published by Nesta, removing the Renewables Obligation levy would save the typical household £94 a year, or roughly £135 between November 2025 and April 2027. The roughly 2 million households with electric storage heaters would see far greater savings in the region of £250 a year. According to Nesta, the total cost of the policy levy is £3.2bn a year, or around £4.5bn between November 2025 and April 2027. Relevant figures can be found on page 4 of this Nesta policy paper. 

Reducing the typical energy bill by £94 would bring it down from £1,755 currently to £1,661 - its second lowest level since the energy crisis began in 2022 (the energy price cap briefly fell to £1,568 in July 2024).