Cut £175 from energy bills for low-income homes, says thinktank
The Resolution Foundation has urged the government to introduce an emergency scheme to cut energy bills by up to £175 this winter for low-income households, warning that wholesale gas prices are likely to rise following renewed conflict in the Middle East. The thinktank says ministers should act now to have a plan ready for when the quarterly energy price cap is adjusted in January, building on Andy Burnham's earlier move to temporarily remove VAT from electricity bills, which saved households around £45 a year.
The proposed £2bn scheme would target households where the highest earner takes home £24,000 a year or less, reaching roughly 40% of households and more than four-fifths of the poorest families, going further than support limited to those on means-tested benefits. The report notes that during the 2022 energy crisis, the £44bn government subsidy helped all households including the wealthiest, and that poorer households cut energy use by 15% more than wealthier ones, with most of that reduction not yet reversed. A Carnegie UK survey found 28% of households could not afford an £850 emergency payment, while the chancellor, John Healey, has said cost of living will be a priority ahead of the budget on 25 October.
- Resolution Foundation proposes £2bn scheme cutting bills by £175 for poorer households
- Targets households earning £24,000 or less, covering 40% of homes
- Comes as wholesale gas prices rise amid Middle East tensions
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Energy bills depend partly on the price of gas traded on wholesale markets, which can rise when conflict disrupts supply or raises uncertainty. In Britain, the energy price cap limits the rates suppliers can charge households, and is reviewed every three months.
During the 2022 energy crisis, the government spent £44bn subsidising bills for households across income levels. Lower-income households tend to have less room in their budgets to absorb higher costs, and many cut their energy use sharply during that crisis.
The Resolution Foundation is a thinktank that researches living standards and economic policy. Its proposal focuses on household income, while earlier support was often tied to receiving means-tested benefits; the debate is about how to target help and who should qualify.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Energy is an essential need, not discretionary spending, and evidence shows poorer households have already cut usage by 15% more than wealthier ones—a hardship burden that shouldn't fall heaviest on those least able to bear it. A targeted £2bn scheme reaching the poorest households is more equitable and efficient than the 2022 blanket approach that benefited the wealthy equally, and with a quarter of households unable to afford an £850 emergency payment and wholesale prices likely rising, modest investment now prevents more serious social consequences.
The case against
Whilst sympathy for struggling households is warranted, permanent subsidies for commodity prices set problematic precedents and prevent sustainable governance; every cost-of-living crisis cannot trigger new spending programmes without fiscal constraint. Energy insulation improvements, supply-side reforms, and market mechanisms should address root causes rather than recurring subsidies, and targeted means-testing creates administrative complexity and dependency on government transfers when long-term investment in energy infrastructure would provide lasting protection without requiring cyclical programmes.