Resolution Foundation proposes \u00a32bn emergency scheme to help people facing higher costs this winter<\/p>\n
Labour should draw up an emergency plan to cut energy prices for low-income families by up to \u00a3175 this winter, the Resolution Foundation has said.<\/p>\n
One of Andy Burnham\u2019s first policy announcements as prime minister was to remove VAT temporarily from electricity bills, saving households about \u00a345 a year.<\/p>\n
But with wholesale gas prices higher since the resumption of hostilities in the Middle East, the thinktank says costs are likely to rise through the winter.<\/p>\n
In a report, the Resolution Foundation recommends a scheme that would cut annual bills by up to \u00a3175 for poorer consumers, at a cost of \u00a32bn to the taxpayer. Support would be restricted to households where the highest earner is taking home \u00a324,000 a year or less.<\/p>\n
By helping 40% of households, the proposal would be more generous \u2013 but harder to implement \u2013 than one that targeted only those in receipt of means-tested benefits.<\/p>\n
Jonathan Marshall, principal economist at the foundation and co-author of the report, said: \u201cThe government can get ahead of this, if it acts now. A targeted energy discount could save eligible households \u00a3175 a year and reach more than four-fifths of the poorest families, while expanding support beyond just those on means-tested benefits.\u201d<\/p>\n
He suggested ministers should have a plan ready to be \u201cswitched on\u201d in January next year, when the quarterly energy cap is adjusted. It could either offer a flat rate \u00a3175 discount or additional help to the lowest-income households.<\/p>\n
Burnham begins a tour of Britain on Monday, pledging to provide \u201ceveryday fixes\u201d for rising bills. Officials say he intends to spend much of the rest of August travelling the country asking the public how the government can improve their lives with a focus on weekly bills and the decline of high streets.<\/p>\n
A survey by the charity Carnegie UK has found that 28% of UK households say they cannot afford an emergency \u00a3850 payment. Another 6% say they cannot afford enough food for everyone in their home and 12% say they cannot afford to socialise at least once a month.<\/p>\n
Thinktanks have long called for better coordination between Whitehall and energy companies to deliver targeted help with energy costs. \u201cSuccessive governments have failed to build a robust system for dealing with household energy prices,\u201d Marshall said.<\/p>\n
The government spent \u00a344bn during the 2022 energy crisis on subsidising bills for all households, including the wealthiest.<\/p>\n
The foundation\u2019s report shows that households in the poorest areas cut back on their energy use by 15% more than those in wealthier postcodes over that period. It says that only one-sixth of this fall in consumption had been reversed, suggesting that these households are still heating their homes less than is comfortable.<\/p>\n
A spokesperson for the Department for Energy Security and Net Zero said: \u201cThe energy secretary\u2019s focus is bringing bills down for good. We will tackle the cost of living to make life\u2019s essentials affordable again and bring back hope.\u201d<\/p>\n
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