Lib Dems call for electricity rebate

A pounds 130 electricity bill rebate for each of the 23 million domestic consumers is to be called for today by the Liberal Democrats in their alternative Budget, writes Patricia Wynn Davies.

The party is also poised to vote against cuts in basic-rate tax in next week's Budget - unless the Government invests an additional pounds 2.5bn in education on top of the already expected increase, which is likely to cover inflation plus 2 per cent.

The suggestion for a Monopoly Utility Rebate, or "rip off" rebate, stands in contrast to Labour's pledge of a windfall tax on all the privatised utilities, to go to the Treasury.

The Liberal Democrats will argue today that the rebate, totalling pounds 3bn, should go directly to consumers. They calculate pounds 130 per household - in addition to a pounds 50 National Grid rebate to all consumers - based on alleged excessive profits made since privatisation, and say it should be limited to the electricity industry because its investment needs are much lower than water's.

Electricity profits are up 60 per cent in real terms since privatisation in 1990-91, with the companies making pounds 10.7bn in profits in five years.

The party will also attack the long-term objective of Gordon Brown, the shadow chancellor, of a 10p in the pound starting rate for income tax. It will call instead for the lifting of 750,000 people out of tax and national insurance by increasing the personal allowance from pounds 3,525 to pounds 3,820, paid for by a 50 per cent marginal rate of tax on earnings over pounds 100,000.

Malcolm Bruce, Liberal Democrat Treasury spokesman, told City and business supporters at the House of Commons last night that both the Government and Labour were engaged in a "shabby deceit" of the electorate. Labour's "casual" promises to cut income tax and VAT, raise benefits and increase spending did not add up, he said.