Energy bill discounts, USA News (London): Lower-income households are set to receive additional help with their energy bills in Andy Burnham’s first Budget. Chancellor John Healey confirmed ahead of the financial statement on Wednesday that standing charges on gas bills will be scrapped from 2027 for around 23 million homes. The charges are a fixed daily fee added to bills, regardless of how much gas a customer uses, and cost around £108 per year for a typical household.
Industry sources had also hinted that help could 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.
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 Policy Options
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 Andy Burnham promised breathing room on the cost of living when he became Prime Minister.
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 last week, she said the charges meant people were billed before they had used any energy – limiting their ability to control costs by reducing consumption.
Alternative Proposals and Efficiency Schemes
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. This could reduce charges on bills but would shift the cost to taxpayers rather than eliminate it.
Separately, the Government is helping households switch to cleaner, more energy-efficient heating through its Boiler Upgrade Scheme, which offers grants towards the cost of installing heat pumps. The scheme could face cuts in tomorrow’s Budget, with reports suggesting ministers are considering reducing its funding to help meet defence spending commitments. However, no cuts have been confirmed. The Government has also launched its Warm Homes Loan Scheme, offering households access to interest-free or lower-interest loans to install technologies such as solar panels, home batteries and heat pumps.
