Reeves could cut green levies from energy bills

Rachel Reeves is considering slashing funding aimed at making homes more energy efficient to pay for a reduction in energy bills, sources have told the Guardian, as the chancellor looks for ways to ease the cost of living in this month's budget.

- Kiran Stacey, Pippa Crerar and Helena Horton

Reeves is finalising a multibillion-pound energy support package that is likely to cut both taxes and green levies from people's bills as she looks to save as much as £170 from the average annual energy bill.

The chancellor is hoping her focus on reducing energy bills will help bolster Labour’s poll rating, dent the appeal of Reform UK and mitigate the impact of likely tax rises when she announces them later this month.

In a rare pre-budget speech yesterday, the chancellor signalled the budget was likely to include many controversial decisions, as she and the prime minister debate breaking a pre-manifesto commitment and raising income tax.

She said: "I could do what previous governments have done, which is to sweep those challenges under the carpet, to cut capital spending, to make the numbers up.

"But then we'd be back here in a year, in five years' time, with productivity still on its knees, growth underperforming, national debt continuing to rise. So I'm being honest with people." She added that easing the cost of living would be one of her three main priorities, alongside reducing the national debt and protecting the NHS.

At the Downing Street event, Reeves hinted at tax rises, adding that "each of us must do our bit" for the country's future.