VAT On Energy - Don’t Forget Not Everyone Uses Gas!

An interview between Ed Miliband and Laura Kuenssberg shown on the BBC on Sunday discussed the importance of clean energy and alternatives to fossil fuel.

As part of the discussion, a 5% VAT reduction on energy bills was not ruled out by the Secretary of State for Energy Security and Net Zero as a way to help manage the cost-of-living crisis in the UK.

According to DEFRA figures, in majority rural Parliamentary Constituencies, 31.1% of properties were off the gas grid in 2023. This is in comparison to only 12.2% of properties in urban parliamentary constituencies.

It is important to recognise that for those properties off the gas grid in rural areas, many are using alternative fuels to heat their homes such as oil or bottled gas.

The DEFRA Rural Digest published in October 2025 states the following:
In Predominantly Rural areas there is also a greater reliance on heating oil than in Predominantly Urban areas. Unlike domestic gas prices, there is no cap on domestic oil prices, so there is the potential for it to be more expensive to heat a home with heating oil than gas.

It is vital, if the Government is considering a VAT reduction on energy bills, that it makes sure that all residents in different areas of the country can benefit from the reduction, not just those that use gas and electricity to heat their homes and predominantly live in urban areas.

Wages earnt in the rural economy are lower than the national average, and the fuel poverty gap in rural areas is double that of urban areas.  For those rural residents paying a premium to heat their homes, it will be important that the Government considers their needs as part of the Autumn Budget so that they are not left at a financial disadvantage.