Warm Home Discount, USA News (London): Lower-income households are set to receive additional help with their energy bills, industry sources have told The i Paper, ahead of the Budget. The support is expected to come through an increase to the Warm Home Discount, which currently provides eligible households with £150 a year off their electricity bills. The discount is expected to rise by up to £100, but there has been speculation it could rise by more.
Those eligible include households receiving qualifying benefits such as universal credit, pension credit, housing benefit and income-related employment and support allowance. Around six million households across Britain are expected to benefit from the scheme this winter, although the number of households covered and any changes to eligibility would depend on the final package. Chancellor John Healey said the Budget would help households with everyday costs.
This Budget is designed to give households breathing space from some of the everyday costs, provide targeted support for businesses and self-employed people, and to start the long-term action needed to get energy costs down for good, he said.
Soaring Energy Costs and Regulatory Price Caps
It comes amid soaring costs for household energy due to global shocks, including the Iran war in the Middle East. On October 1, the regulator Ofgem increased the price cap for energy bills by 4 per cent to £1,723 a year. The cap is expected to rise again in January, with energy consultancy Cornwall Insight predicting a 16 per cent rise to £1,999 a year, with prices expected to stay high throughout 2027.
This is putting pressure on the Government to act after Prime Minister Andy Burnham promised breathing room on the cost of living. Alongside immediate help with bills, ministers are expected to consider longer-term changes aimed at bringing down energy costs. Energy Secretary Miatta Fahnbulleh has said ministers are examining options to reform standing charges, describing them as a system the public absolutely hates.
Speaking at a lunch with journalists, she said the charges meant people were billed before they had used any energy, limiting their ability to control costs by reducing consumption. She said the Government was looking at the options and added that it needed to act urgently to get rid of the current system.
Other Proposals and Political Reactions
Other options being discussed include changes to energy tariffs to make essential energy use more affordable for low-income households. A social tariff, for example, could offer eligible households discounted energy, although its design would need to determine who qualifies and how the cost is funded. Another proposal is to move some policy costs currently included in energy bills into general taxation.
Meanwhile, the Conservatives have argued that targeted support will not go far enough, calling instead for measures to reduce energy costs for everyone. Andrew Bowie, the shadow Energy Secretary, told The i Paper that their proposed cheap energy plan would remove levies, charges and VAT from energy bills to reduce costs regardless of household income.
Separately, the Government is helping households switch to cleaner heating through its Boiler Upgrade Scheme, which offers grants towards heat pumps, though reports suggest funding could face cuts. The Government has also launched its Warm Homes Loan Scheme, offering interest-free or lower-interest loans to install solar panels, home batteries and heat pumps with repayment terms of up to 30 years.
