A policy thinktank has urged the government to establish an urgent support program addressing rising energy costs for financially struggling households. The proposal would reduce annual bills by up to £175 for qualifying families, with eligibility based on the highest earner in a household receiving no more than £24,000 annually. According to the recommendation, this approach would benefit approximately 40% of UK households while costing taxpayers an estimated £2 billion.
The thinktank suggests the scheme should be prepared for implementation in January, coinciding with quarterly adjustments to the energy price cap. The initiative could operate through either a flat-rate discount structure or tiered assistance prioritizing the lowest-income households. Officials note that this targeting approach would reach more than four-fifths of the poorest families while extending beyond recipients of means-tested benefits alone.
The proposal comes as Prime Minister Burnham has pledged to address living cost pressures, including a previously announced temporary VAT removal on electricity bills offering approximately £45 in annual savings. Recent survey data indicates significant financial strain among UK households, with nearly three-tenths reporting inability to manage unexpected £850 expenses. Energy consumption data from prior crisis periods demonstrates that lower-income households reduced usage by substantially higher percentages than wealthier areas, with limited recovery since that time.
Experts have emphasized the need for coordinated policy frameworks between government and energy sector participants to deliver targeted relief. Wholesale gas prices have risen following renewed conflict in the Middle East region. The chancellor has identified cost-of-living pressures as a government priority ahead of a scheduled budget announcement, which will also address funding mechanisms for various policy commitments and regional distribution of resources.
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