The Resolution Foundation has called on the government to launch a £2bn emergency scheme this winter to slash energy bills for low-income households by as much as £175. The proposal would build on an earlier move to remove VAT from electricity bills, which saved typical households roughly £45 a year, by targeting deeper, more direct support at those struggling most with rising costs.
What is the Resolution Foundation proposing?
The think tank wants ministers to design a targeted support package worth £2bn that would directly reduce bills for lower-income families facing another difficult winter of high energy costs. Rather than spreading relief evenly across all households, the scheme would concentrate savings on those least able to absorb price rises, delivering cuts of up to £175 for eligible families.
This would mark a shift from the earlier, broader VAT reduction on electricity, which lowered bills for all households by a modest £45 annually but did little to specifically shield the poorest consumers from continued price pressure.
Why does the think tank say targeted help is needed?
The Resolution Foundation argues that blanket measures like the VAT cut, while helpful, are too limited to protect vulnerable households from the scale of costs they still face this winter. It says a more focused emergency intervention is needed to prevent low-income families from falling further behind on bills as energy prices remain a persistent strain on household budgets.
Emergency, targeted support is needed to stop the poorest households bearing the brunt of high energy costs this winter, the thinktank said.
What has already been done on energy bills?
One of the first policy moves after Andy Burnham became prime minister was to temporarily remove VAT from electricity bills, a step estimated to save the average household about £45 a year. That measure was framed as an initial response to ongoing affordability pressures, but the Resolution Foundation suggests it falls well short of what is required to meaningfully protect lower-income families through the colder months.
The think tank’s new proposal effectively calls for the government to go further, layering a more substantial, income-targeted subsidy on top of existing relief to ensure the households most exposed to fuel poverty see a bigger reduction in what they owe.
