The Rt Hon George Osborne, MP
Chancellor of the Exchequer
HM Treasury
1, Horseguards Road
London
SW1A 2HQ

29 September 2011

Dear George,

I am sure you are aware of widely supported proposals to cut the rate of VAT on goods and services which improve household energy efficiency. On the 12th of September, twenty six organisations, including the British Property Federation, the UK Green Building Council, WWF and the Royal Institution of Chartered Surveyors, called on the Government to reduce VAT to 5% for all energy saving measures installed in homes and businesses under the flagship "green deal" scheme. This is an issue which was widely discussed in the Energy Bill's Public Bill Committee, and which I raised again at the Bill's report stage debate.

I strongly believe that unless much more is done to reduce the cost of energy efficiency measures, such as cutting the rate of VAT, the Green Deal will fail to live up to its full potential. It cannot be right, in my opinion, that fuel is charged at a reduced VAT rate of 5% while measures to reduce the consumption of this fuel are charged at 20%. As this is a matter for the Treasury, I would be interested to know if you or your officials have raised this issue with the DECC.

Either separately or in collaboration with DECC, have you made any assessment of the impact that such a change could have on the uptake of goods and services to improve energy efficiency, and of the potential reduction in CO2 emissions from buildings that could result? Equally, can you tell me if any assessment has been made of the overall impact that such a move would have on the income to the Treasury.

I look forward to your response.

Yours sincerely,

Caroline Lucas, MP, Brighton Pavilion

Read the Treasury's reply (page 1 2)