The Resolution Foundation has called on the government to establish a targeted energy assistance program aimed at reducing bills for low-income households during the coming winter months. The proposal would provide up to £175 in annual savings for eligible families, with support restricted to households where the highest earner takes home £24,000 a year or less. According to the thinktank’s analysis, such a scheme would benefit approximately 40% of households and reach more than four-fifths of the poorest families at a cost of £2bn to public finances.
This recommendation comes as wholesale gas prices remain elevated following renewed conflict in the Middle East. The government has already announced a temporary reduction in VAT on electricity bills, which provides households with approximately £45 in annual savings. However, the Resolution Foundation argues that additional measures are necessary to address anticipated cost increases during winter months. The thinktank suggests ministers prepare a plan that could be implemented in January when the quarterly energy price cap is adjusted, offering either a flat-rate discount or additional assistance specifically for the lowest-income households.
Prime Minister Andy Burnham has made cost-of-living relief a central focus of his administration. He is currently undertaking a tour of Britain to gather public input on household expenses and economic hardship. Survey data from Carnegie UK indicates significant financial strain among the population, with 28% of households unable to afford an emergency payment of £850, 6% unable to afford adequate food, and 12% unable to afford monthly social activities.
The government’s approach to energy support represents a shift from previous responses to the energy crisis. During the 2022 energy emergency, the state spent £44bn subsidizing bills universally across all income levels. The Resolution Foundation’s research indicates that poorer households reduced energy consumption by 15% more than wealthier ones during that period, and only one-sixth of this reduction has been reversed, suggesting continued discomfort in heating standards.
Chancellor John Healey has identified cost-of-living concerns as a priority ahead of the budget scheduled for 25 October. The upcoming budget is expected to outline government plans for funding various initiatives while also detailing how tax revenues will be distributed to regional mayors.
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