How will the VAT cut be funded?

Tuliptree

I think it was the use of the word experts. What there are here are some well- informed posters, I doubt any of them would describe themselves as experts.. I’m not sure the SO was needed either. What was wrong with saying ‘I don’t understand how the VAT cut is being funded. Can anyone explain please?’ That has a very different tone,

The capitalisation of SO and the framing of what follows is what pushes it toward sarcasm. Add that to the facts that, although some people on GN are knowledgeable in specific areas and some research areas of interest, I have never seen anyone present themselves as an expert, and you have the reasoning behind my comment.

Reduction of bus fares cap back to £2 is a great idea and I don’t care how it’s funded.
It means DD will save around £18. Plus £10pw for 1 DGD.

Can I ask where the boundary is drawn between the things you care about knowing where the funding is coming from and those you don't? As the thread starter who was keen to know how the VAT cut will be funded it seems odd that you don't care about the bus fare cuts.

I speak as someone in support of both, incidentally.

The current bus fare cap is £3 so savings are £1 for each journey.

25Avalon

The current bus fare cap is £3 so savings are £1 for each journey.

Exactly. So for the two jobs DD works, that means she will save £18, plus bus fare for DGD. You can imagine, if she needs to do two jobs, neither of them are well paid, so it’s a big saving.

OMG am I not allowed a choice of what I care about, just because I’d like to know where some funding is coming from?

My query was about the source of the money from the scrapping of the already scrapped (in January) ID scheme which was unfunded.

e.g. I haven’t got the money to buy a new car, so I’ll scrap the idea of the new car that I don’t have money for and use the money that I didn’t have for the car to buy something else.

I can’t recall which poster said that the government can simply produce more money it needs because it’s not a household budget.

AB has only been in the job for a couple of days! His new to post cabinet minsters just coming to terms with their briefs. I sense huge impatience in the air- but I guess that was always going to be the case.

I wouldn't expect all funding streams to be spelt out in fine detail at this stage. Some posters are happy not knowing where funding is coming from, some happy to wait for a more detailed budget statement and some that are going to be impatient with the new LP leader and announcements anyway.

AB is seasoned and experienced and will no doubt steer his course and his cabinet's course, in a planned way and in a realistic, step by step timescale.

MaizieD has explained this many times. The government can create whatever money it wants to.

Watch Richard Murphy explain:

www.taxresearch.org.uk/Blog/2024/04/29/tax-does-not-pay-for-government-spending/#gsc.tab=0

Spending always comes before taxation.

If people have more money in their pockets by saving on their energy bill or bus fares they are likely to go and spend that extra money on another things, to engage in activities that stimulate the economy and increase tax yield.

Cheaper bus fares is a good example. What will your daughter spend that £28 on? It’s money she must already have as she has been paying these fares so now she will have it to spend on something else.

Cheaper fares will encourage more people to use the buses … to go to work, to go out to be entertained and so on. It’s why the older person's bus pass is such a good idea. Instead of staying home, it gets older people out and about where they spend money.

Darren Jones had already explained last year that the money for the ID scheme would come from existing budgets. He said the OBR were wrong to say the scheme was unfunded. I like DJ but he’s just miffed that he’s lost his job.

When the cut in VAT on fuel is applied everyone's electricity bills will go down. Possibly this means that the newly set cap will cost less?

Graphite

MaizieD has explained this many times. The government can create whatever money it wants to.

Thanks. I knew I’d read it somewhere.
It doesn’t work for household budgets sadly.

There must be quite a few people like myself who normally only pay bus fares before nine in the morning, when I take my grandchildren to school. A flat-rate single fare in London is £1.75 and covers you for multiple journeys within the hour so the new fare regime honestly won't make a difference to those of us on Gransnet who live in Greater London.
I don't know the situation for others in the UK, though for those who live rurally and need to travel early it would obviously make more difference.

I am still awaiting an announcement that will make a tangible difference to my life.

No buses in my part of rural England.

VAT relief off electricity bills ….the VATon my last monthly bill was £2.70 ……but I suppose every little helps!

Yes Zetters!

Increasing bus routes in rural locations would make a huge difference to people’s lives.

My daughter lives in a remote village with a very sparse bus service. My 19 year old grandson has been unable to get a summer job because he can’t get in to the nearest town where any work would be located.

£2 bus fare is meaningless when there are no buses🤷‍♀️

I think we have to be realistic though. If everybody who currently uses buses and pays £3 has every journey cost reduced to £2, that will make a significant difference to them. Reinstating bus services to rural communities is a further step, will benefit a lot less people and will be far more costly. None of us will benefit from every change, but if the ones that affect large numbers of people happen, that is surely a good thing.

It's not the tax he's should cut, it's the price of energy - and so do something about the disgusting profits being made by energy (and food and so many other so called 'companies' that are really just thieves).
Until AB tackles that - nothing much will change.

Personally I think that a major problem is the current high standing charge. The less power you use, the higher the proportion of your bill that is made up of the standing charge. If people were actually charged for the power that they used it would be fairer for low users.

Sorry, unable to edit. I meant standing charges should be removed altogether.

Exactly. So for the two jobs DD works, that means she will save £18, plus bus fare for DGD. You can imagine, if she needs to do two jobs, neither of them are well paid, so it’s a big saving.
Yes, that's a big saving, and if it encourages more people to use buses and leave cars at home, so much the better.

OMG am I not allowed a choice of what I care about, just because I’d like to know where some funding is coming from?
I'm not 'allowing' or disallowing anything. We aren't at school. I was just asking why you are concerned about the costings of some things but not others. People seem to be picking on everything they can, to find fault with the Labour government, so I'm interested to know what makes the difference between things that have to come with full costings attached and things that don't.

I agree about standing charges, cc. Scrapping them would be a very good move.

cc

Personally I think that a major problem is the current high standing charge. The less power you use, the higher the proportion of your bill that is made up of the standing charge. If people were actually charged for the power that they used it would be fairer for low users.

That’s true.
We used £2.47 of gas from June bill to July bill. That, plus the standing charge plus VAT came to nearly £13.

Yes, that's a big saving, and if it encourages more people to use buses and leave cars at home, so much the better.
If it means the people without cars are able to more easily afford to use the buses, That’s even better.

Mollygo

cc

Personally I think that a major problem is the current high standing charge. The less power you use, the higher the proportion of your bill that is made up of the standing charge. If people were actually charged for the power that they used it would be fairer for low users.

That’s true.
We used £2.47 of gas from June bill to July bill. That, plus the standing charge plus VAT came to nearly £13.

You illustrate the unfairness of the current system very well Mollygo, if the standing charge was removed the unit charge went up to cover this, low users like yourself would have much fairer bills.

Mollygo

^Yes, that's a big saving, and if it encourages more people to use buses and leave cars at home, so much the better.^
If it means the people without cars are able to more easily afford to use the buses, That’s even better.

Both are equally important, as if people leave their cars at home and travel by bus it will enable buses to become more viable, and expand routes, which will benefit everybody. It’s also better for the environment and reduces road traffic accidents.

Standing Charges. They are unfair I have Solar panels and use very little grid power in summer so do a lot of others but the connection still needs to be maintained.

My standing charge is a lot more than power used, every dwelling needs a supply available that needs to be paid for

I agree about standing charges. Martin Lewis has been campaigning on this for a long time and calls them a moral poll tax.

There comes a point where people who try hard to keep their footprint small and or generate renewables can’t make any more economies and find their standing charges exceed their energy use. I’m in that category.

The argument is always that unit prices would have to rise to compensate and that would penalise households who have to use a lot of energy due to poor health. But there could be special tariffs for that. I though that social tariffs were being introduced but haven’t heard any more about that.

Something for the new Minister Miatta Fahnbulleh to get together with Lewis and Ofgem to sort out.

Mollygo

^Yes, that's a big saving, and if it encourages more people to use buses and leave cars at home, so much the better.^
If it means the people without cars are able to more easily afford to use the buses, That’s even better.

Yes, this too. The environment will benefit more from people leaving cars at home, and if more people who couldn't otherwise afford to travel can now do so that's a social benefit. Both are good, and if the scheme expands to reopen quieter routs that have been closed, so much the better.

I know France has standing charges - anyone know anything about other countries in Europe? Another argument put forward for them is a consistent reliable funding base to maintain the infrastructure. As for the issue of the impact of abolition on the unit charge and thus on high users for health reasons, I wonder in reality how that would pan out? It might sound a straightforward idea but we all know that for every complicated problem there is always a simple answer and it’s usually wrong. Would such a special tariff ( if it could be defined who should be on it) just end up being another divisive issue to beat ill/ disabled people with and prompt more outrage at such people? But I actually think my first point is what’ll stop standing charges being abolished - the energy companies won’t countenance such a reliable income stream being removed.