The government is looking at the possibility of cutting the rate of VAT on energy bills, Ed Miliband has suggested.

The energy secretary said he would not speculate ahead of the chancellor’s Budget in November.

But asked if the government would consider scrapping the 5% rate, he told the BBC the country was facing a “cost-of-living crisis that we need to address as a government” and “we’re looking at all of these issues”.

The government is under pressure to reduce household energy costs and before the election Labour pledged to lower average bills by £300 a year by 2030.

Miliband told the BBC’s Sunday with Laura Kuenssberg programme he stood by that promise but the reason bills were so high was “because of our dependence on fossil fuels”.

He added: “There is only one route to get bills down, which is to go for clean power, home-grown, clean energy, that we control, so we’re not at the behest of the petrol states and the dictators.”

Pressed over whether the government was considering scrapping the 5% VAT rate on energy bills in November’s Budget, Miliband said: “The whole of the government, including the chancellor, understand that we face an affordability crisis in this country.

“We face a cost-of-living crisis, a longstanding cost-of-living crisis, that we need to address as a government. We also face difficult fiscal circumstances… so obviously we’re looking at all of these issues.”

A Treasury spokesperson said: “We do not comment on speculation.”

Scrapping VAT on domestic energy bills would save the average household £86 per year and cost an estimated £2.5bn per year to implement, according to the charity Nesta.

There was a rapid spike in energy prices in 2021, following Russia’s invasion of Ukraine, and although costs have gone down, they have remained high by historical standards.

This month bills went up by 2% for millions of households, under the energy regulator Ofgem’s price cap.

It means a household using a typical amount of energy will pay £1,755 a year, up £35 a year on the previous cap.

Earlier this week Chancellor Rachel Reeves told the BBC she was planning “targeted action to deal with cost-of-living challenges” in her Budget next month.

The BBC understands this could also include reducing some of the regulatory levies currently added to energy bills.

Levies known as “policy costs” – which are used to fund environmental and social schemes such as subsidies for renewables – made up around 16% of the average electricity bill and 6% of the average gas bill last year.

Some energy bosses have argued green levies are partly to blame for rising bills and the government’s independent adviser, the Climate Change Committee, has long recommended removing policy costs from electricity bills to help people feel the benefits of net-zero transition.

Asked whether these could be funded through taxes rather than coming off energy bills, Miliband said: “That’s always a judgement for the chancellor, but let’s be honest we know we’ve got really difficult fiscal circumstances that we inherited… but absolutely we look at those things.”

He argued the government had to invest in “aging electricity infrastructure” but there needed to be a “balance between public expenditure and levies”.

The cost of household energy bills has become a major political battleground, with the Conservatives and Reform UK blaming net-zero policies for higher prices.

The Conservatives have said they would scrap the Climate Change Act, which legally requires the UK government to reduce emissions to net zero by 2050, as well as ditch carbon taxes on electricity generation and cut a funding scheme for renewables.

Shadow energy secretary Claire Coutinho said her party’s plans would cut electricity bills for everyone by 20%.

“[The public] care about climate change but what I don’t think they are signing up for is much higher bills and jobs being lost to countries abroad,” she told the BBC.

In an interview with the same programme, Green Party leader Zack Polanski argued nationalising energy companies would help cut costs for customers.

His party has also proposed a new tax on carbon emissions to drive fossil fuels out of the economy and raise money to invest in the green transition.

Challenged over whether businesses would simply pass on these costs to customers, Polanski rejected this and said the tax would be “vital for tackling the climate crisis”.

“What we need to be doing is finding other ways to support particularly small and local businesses… We know the big corporations are destroying our environment, our democracy and our communities,” he said.

“They can make a profit, sure, but this isn’t about squeezing out every single profit they can make.”

The government has announced plans to train and recruit more workers for the UK’s clean energy sector, promising to create 400,000 extra jobs by 2030.

Plumbers, electricians and welders are among 31 priority occupations that are “particularly in demand”, with employment in renewable, wind, solar and nuclear expected to double to 860,000 in five years, ministers have said.

Speaking on the BBC’s Sunday with Laura Kuenssberg programme, Energy Secretary Ed Miliband said thousands of jobs were needed to develop Britain’s clean energy sector to “get bills down for good”.

Welcoming the proposals, Unite the union said: “Well-paid, secure work must be at the heart of any green transition.”

As part of the government’s strategy, five “technical excellence colleges” will be set up to train workers with clean energy skills, with £2.5m in funding going towards pilot schemes in Cheshire, Lincolnshire, and Pembrokeshire, according to the Department for Energy Security and Net Zero (DESNZ).

A new programme is to be launched to match veterans with careers in solar panel installation, wind turbine factories and nuclear power stations, while oil and gas workers could benefit from up to £20m from the UK and Scottish governments for bespoke careers training in clean energy roles.

There would be also be tailored schemes for ex-offenders, school leavers and the unemployed.

He said 10,000 extra jobs would be needed to support the construction of the Sizewell C nuclear power station in Suffolk and described how the Siemen’s wind turbine factory in Hull was “booming”.

Miliband also told the BBC he stood by his pledge to reduce energy bills by £300 by 2030, after bills went up by 2% for millions across the UK under Ofgem’s latest price cap, which sets the maximum price that can be charged for each unit of gas and electricity for millions of househoulds in England, Scotland and Wales.

The increase for October to the end of December means a household using a typical amount of energy will pay £1,755 a year, up £35 a year.

In a statement, Miliband said the plan would bring “a new generation of good industrial jobs” to communities across the UK.

“Our plans will help create an economy in which there is no need to leave your hometown just to find a decent job.

“Thanks to this government’s commitment to clean energy, a generation of young people in our industrial heartlands can have well-paid, secure jobs, from plumbers to electricians and welders.”

According to DESNZ, jobs in the clean energy sector command average salaries of more than £50,000, compared to the UK average of £37,000.

Work and Pensions Secretary Pat McFadden said: “We’re giving workers the skills needed to switch to clean energy, which is good for them, good for industry, and will drive growth across the nation.

“Our new jobs plan will unlock real opportunities and ensure everyone has access to the training and support to secure the well-paid jobs that will power our country’s future.”

Christina McAnea, general secretary of Unison, said the government’s strategy could “help create a UK workforce with highly skilled, fairly paid and secure jobs”.

“Additional funding for apprenticeships and opportunities for young people are crucial too if the UK is to have a bright and clean energy future,” she added.