Now "cut from the standard 20%" is an interesting phrase, implying - to my mind - something recent. And definitely implying that it once was at 20%. But no, this is not true at all, not even a tiny bit. As VAT on fuel & power, Research Paper 97/87, 9 July 1997 will tell you,
When VAT was first introduced in 1973 supplies of fuel & power were charged the zero rate. On 1 July 1990 'non-domestic' supplies to industry and commerce became liable to VAT at the standard-rate, leaving the zero rate covering supplies to final consumers only: ie, supplies used in houses, flats, dwellings, etc, as well as supplies used by a charity for its non-business activities. On 1 April 1994 domestic supplies of fuel & power became liable to value added tax (VAT) at the reduced rate of 8%. It had been the Conservative Government's intention that these supplies would be charged the standard rate of VAT - currently 17.5% - the following year. However in December 1994 the Government was defeated on a Budget Resolution vote on this question, and was required to introduce amending legislation so that these supplies continued to be charged VAT at 8%. In October 1995 the Labour party announced its intention to cut the rate of VAT on domestic supplies of fuel & power from 8% to 5%, a commitment included in their election manifesto. On 2 July 1997 in his Budget speech the Chancellor, Gordon Brown, announced that the new 5% rate would come into effect on 1 September 1997.So the question becomes, is charging VAT on domestic G+E at 5% rather than 20% a subsidy to fossil fuels? Maybe, but not obviously.
And so we have The UK government did not dispute the data but denied that it provided any subsidies for fossil fuels under its own definition and that of the International Energy Agency. “We do not subsidise fossil fuels,” a government spokeswoman said. Whether that is true of not depends on your defns. So what are we to make of the unparliamentary language of Shelagh Whitley, also at ODI, was dismissive of the UK government’s claim to provide no fossil fuel subsidies. “They are lying,” she said. “It’s absurd..."? SW is lying in asserting that the UK govt is definitely lying. You may, if you wish, dispute the UK govts interpretation of the definitions.
What of the report?
The Graun, of course, is only picking snippets out of a long report which is mostly about other things. I, of course, am not going to read the whole thing, I'm just going to ctrl-f for "subsid". The first interesting quote is It is important to note in any discussion of subsidies that there are multiple legitimate reasons for intervening in the energy sector with financial or regulatory support, to correct imperfect markets and to give long-term strategic direction not provided otherwise. I should have expected that; this is the EU; they are always going to provide themselves a let-out for subsidising things that they like for reasons that please them. Notice what they don't have to say, though: that what is a subsidy depends criticially on your defn. This is definitely not an aspect they wish to consider. Figure 10 shows that whilst UK "subsidies" are higher than France's, ours have fallen from 2008 to 2016, whereas theirs have risen.
Unfortunately the report provides no detail of the break down of the subsidies, only Subsidies to petroleum products (mainly tax reductions) account for the largest share within fossil fuels, so just for once I can't fault the Graun for providing an irritating lack of detail: that's the EUs fault.
Craig Bennett, the Friends of the Earth CEO, said: “Spiralling climate change is going to cost people and our economy huge sums of money, through the damage, disruption and instability it causes. So it’s astonishing that the UK government is still throwing taxpayers’ money at... Which makes it clear that people are going to "misinterpret" this stuff. Because whatever charging a VAT rate of 5% rather than something higher is, it certainly isn't throwing taxpayers money at anything. Quite the reverse: increasing the tax rate would be flinging the money at the govt :-).
* The emergence of modern astronomy – a complex mosaic: Part I