The Resolution Foundation has released a report recommending that the government establish a targeted energy assistance program to support low-income households facing rising costs. The proposal would reduce annual energy bills by up to £175 for eligible families, with support restricted to households where the highest earner brings home £24,000 or less annually. The scheme would reach approximately 40% of all households and cost an estimated £2bn to the taxpayer.
According to the thinktank, this approach would be more comprehensive than limiting aid solely to those receiving means-tested benefits, potentially reaching over four-fifths of the poorest families. The report suggests the program could be implemented starting in January, coinciding with quarterly adjustments to the energy price cap. The initiative could offer either a flat-rate discount of £175 or provide additional support specifically targeted at the lowest-income households.
The recommendation comes as wholesale gas prices have risen following renewed hostilities in the Middle East. The government has already implemented a temporary VAT removal on electricity bills, providing households with approximately £45 in annual savings. However, the Resolution Foundation argues that additional measures are necessary to address affordability concerns among vulnerable populations.
Recent surveys indicate significant financial hardship among UK households. According to research by the Carnegie UK charity, 28% of households cannot afford an emergency payment of £850, while 6% struggle to afford adequate food and 12% cannot afford monthly social activities. The thinktank notes that during the previous energy crisis in 2022, the government spent £44bn subsidizing bills for all households regardless of income level. It found that low-income households reduced energy consumption by 15% more than wealthier areas, with only one-sixth of that reduction reversed since then.
Prime Minister Andy Burnham is currently touring Britain to discuss cost-of-living concerns with constituents, emphasizing government commitments to addressing weekly bills and other affordability issues. Chancellor John Healey has identified tackling the cost of living as a priority ahead of the budget scheduled for 25 October.
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