Government unlikely to aid energy bills before October rise
The government is not expected to offer further help with household energy bills before the price cap rises by 4% in October, despite ministers acknowledging the pressure on families. It may reconsider targeted support ahead of January if prices rise again, with global gas-market disruption linked to the US war on Iran cited as a major cause.
The government has already removed VAT from domestic electricity bills, saving an average household about £45 a year, after bills rose 13% in July. The Resolution Foundation says support should be prepared for households earning under £24,000, potentially reaching 40% of households and saving £175 on average, while the TUC has called for a windfall tax on bank profits to fund bill reductions.
- No extra energy-bill support is expected before October’s 4% rise.
- Ministers may consider targeted help if prices increase again in January.
- Thinktank proposes £175 average support for lower-income households.
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The energy price cap limits what suppliers can charge for each unit of gas and electricity, but it does not set a fixed total bill: households that use more energy pay more. It is reviewed several times a year, so changes in wholesale energy costs can feed through to bills.
Gas prices are affected by supply and demand around the world, as well as events that disrupt production or trade. Governments can reduce bills through measures such as tax cuts or targeted payments, while proposals to fund support through taxes on company profits are a separate policy choice. These decisions matter because energy costs take up a larger share of income for households on lower earnings.
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The case for
Households are experiencing significant financial hardship with energy bills rising sharply, whilst vulnerable low-income families risk genuine deprivation and hardship. The government has already demonstrated it can intervene effectively through VAT removal, and should now provide targeted support to households earning under £24,000, potentially saving them £175 annually. Such support could be progressively funded through windfall taxation on profitable energy and banking sectors, combining immediate crisis response with fair burden-sharing.
The case against
The government has already provided meaningful support through VAT removal and must exercise fiscal discipline given competing priorities and constraints on public finances. A measured approach—monitoring conditions carefully and remaining prepared to intervene more substantially if circumstances deteriorate significantly—represents prudent governance that responds to genuine need without overcommitting public resources. Caution about unintended consequences of large-scale intervention, such as effects on investment and inflation, is warranted.
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Originally published by The Guardian as “No more UK energy bills support likely before price cap rise”.