Cut £175 from energy bills for low-income homes, says thinktank
Resolution Foundation proposes £2bn emergency scheme to help people facing higher costs this winter Labour should draw up an emergency plan to cut energy prices for low-income families by up to £175 this winter, the Resolution Foundation has said. One of Andy Burnham’s first policy announcements as prime minister was to remove VAT temporarily from electricity bills, saving households about £45 a…
The Resolution Foundation, a thinktank, has proposed a £2 billion emergency scheme to help low-income households reduce their energy bills by up to £175 during the upcoming winter. Labour's potential future Prime Minister, Andy Burnham, has suggested removing VAT temporarily from electricity bills, which would save households approximately £45 per year. However, the rising gas prices due to the ongoing Middle East conflict suggest that costs are likely to continue increasing this winter.
Jonathan Marshall, principal economist at the foundation and co-author of the report, emphasized that the government can proactively address this issue if it acts now. He proposed a targeted energy discount that could save eligible households £175 annually while reaching over 80% of the poorest families. Burnham suggested that ministers should have a plan ready to be activated in January next year, when the quarterly energy cap is adjusted.
The proposal could either provide a flat rate of £175 discount or additional support for the lowest-income households. This plan is more comprehensive than one that only targets households receiving means-tested benefits. The government spent £44 billion during the 2022 energy crisis on subsidizing bills for all households, including the wealthiest, but households in poorer areas cut back on energy use by 15% more than those in wealthier neighborhoods.
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