Thinktank proposes £175 energy bill cut for low-income homes

A leading thinktank has put forward a proposal to reduce energy bills by £175 for low-income households1, aiming to provide crucial financial relief amidst ongoing cost of living pressures. The recommendation highlights the persistent challenges of energy affordability in the UK and the need for targeted interventions to support those most impacted by utility expenses.

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The challenge of energy bills for low-income households

Understanding fuel poverty and the cost of living crisis

The ongoing cost of living crisis has disproportionately impacted low-income households across the UK, making energy bills a significant financial burden. Many families find themselves in fuel poverty, a situation where they struggle to afford to heat their homes adequately. Research from the Resolution Foundation indicates that lower-income areas reduced their gas consumption more than wealthier postcodes during the last energy crisis, yet many still do not warm their homes to a comfortable level. This suggests that for many, cutting back on energy use is not a choice for environmental reasons, but a necessity driven by financial constraints.

The impact of high energy costs on vulnerable families

High energy costs can have a severe impact on vulnerable families, leading to difficult choices between heating and other essentials like food. This financial strain can affect physical and mental well-being, creating a cycle of hardship. The current energy market, despite price caps, remains volatile, and targeted support is essential to prevent further distress for those least able to absorb rising costs.

Government support schemes for energy bills

The UK government offers several schemes designed to provide financial relief and support to households struggling with energy costs. Understanding these programmes is the first step towards accessing vital assistance.

Warm Home Discount scheme: eligibility and application

The Warm Home Discount scheme provides a one-off rebate of £150 on your electricity bill for winter 2026 to 2027, opening in October 2026 with payment by 31 March 2027. This discount is not paid directly to you but is applied as a credit to your electricity account.

For those in England and Wales, if you qualify, you should receive a letter between October and mid-December confirming your eligibility or advising you to contact a helpline. In Scotland, eligibility criteria can differ, and some may need to apply directly through their energy supplier. Most major energy suppliers participate in the scheme.

Winter Fuel Payment and cold weather payment explained

Beyond the Warm Home Discount, two other key payments help with heating costs:

• Winter Fuel Payment: This is an annual tax-free payment of between £100 and £300, designed to help older people with their heating bills. For winter 2026 to 2027, you are generally eligible if you were born before 28 June 1960 and live in England or Wales. Payments are usually made automatically between November and December. However, if your total taxable income is over £35,000 a year, the full amount will be recovered via your tax code or Self Assessment.
• Cold weather payment: If the average temperature in your area is recorded as, or forecast to be, 0°C or below for seven consecutive days between 1 November and 31 March, you could receive a payment for each qualifying period. This payment is for those on certain benefits and is typically paid automatically into the same account as your other benefit payments.

Household support fund: local council assistance

The Household Support Fund is a government grant distributed by local councils across England, Scotland, Wales, and Northern Ireland. Its purpose is to assist households struggling with the cost of essentials, including energy and water bills, food, and clothing. Councils have discretion over how they use the fund, meaning the support offered and eligibility criteria can vary depending on your local authority. You do not always need to be receiving benefits to qualify for help from the Household Support Fund. To find out what support is available in your area, contact your local council.

Energy supplier assistance and debt support

If you are struggling to pay your energy bills or are in debt to your supplier, there are avenues for support directly through your energy provider.

Grants from energy suppliers for bill arrears

Many energy suppliers offer grants to their customers who are in debt. You can contact your own supplier to enquire about their hardship fund. The British Gas Energy Trust is notable as it also offers grants to individuals who are not British Gas customers, provided they meet certain eligibility criteria and have sought debt advice.

Payment plans and managing energy debt

If you are worried about paying your bills, it is crucial to contact your energy supplier as soon as possible. Ofgem, the energy regulator, mandates that suppliers must work with you to agree on an affordable payment plan. Understanding your energy bill can help you discuss options more effectively. This could include reviewing current payments, offering payment breaks or reductions, providing more time to pay, or granting access to hardship funds.

Social tariffs and energy assistance programmes

While traditional "social tariffs" for energy, which offered reduced rates, have largely been phased out and replaced by schemes like the Warm Home Discount, some energy companies still provide specific support for low-income customers. It is always worth contacting your energy supplier directly to enquire about any assistance programmes or personalised payment options they might offer.

Other support

If you are in a vulnerable situation, you may also be eligible for the Priority Services Register (PSR), which offers extra support from your energy supplier and network operator, such as advance notice of power cuts or meter reading services. You can find out more about the PSR and how to join.

Practical steps to reduce household energy costs

Beyond financial aid, implementing practical, low-cost measures can significantly reduce your energy consumption and, consequently, your bills.

Low-cost energy efficiency tips for every Home

Small changes can lead to meaningful savings. Consider these low-cost energy efficiency measures:

• Draught-proofing: Seal unwanted gaps around doors and windows with Self-adhesive strips or use draught excluders at the bottom of doors to prevent heat loss.
• LED lighting: Switch to LED bulbs, which use significantly less electricity and last longer than traditional bulbs.
• Thermostat settings: Lowering your thermostat by just 1°C can help reduce heating bills. Most healthy adults find 18°C to 21°C comfortable.
• Appliance use: Use air fryers or microwaves instead of conventional ovens for smaller meals, as they are often more energy-efficient. Turn off appliances at the wall rather than leaving them on standby, which can lead to savings.
• Hot water: Only boil the amount of water you need in the kettle. Taking shorter showers can also reduce water heating costs.

Understanding your energy usage with smart meters

Smart meters can be a valuable tool in managing your energy consumption. They provide real-time data on your electricity and gas use, often displayed on an in-Home display. By tracking which appliances use the most energy, you can make informed decisions about when and how to use them, helping you to identify areas for savings. Consider a smart meter installation to gain better insight into your usage.

Maximising savings through behavioural changes

Simple changes in daily habits can also contribute to lower bills:

• Laundry: Wash clothes at lower temperatures and air-dry them whenever possible, as tumble dryers are significant energy users.
• Heating zones: Use thermostatic radiator valves (TRVs) to reduce heating in rooms you use less, focusing warmth where it's needed most.
• Body warmth: Wear additional layers and use blankets to stay warm before increasing the thermostat setting.

Navigating support and planning for the future

Accessing available support and adopting proactive energy management strategies can empower households to take control of their energy costs.

How to access advice and advocacy services

Navigating the various schemes and grants can be complex. Several organisations offer free, impartial energy advice and advocacy services:

• Citizens Advice: Provides comprehensive guidance on grants and benefits.
• National energy action (NEA): Offers energy bill help and advice.
• The wise group: Delivers free energy advice and advocacy support.
• LEAP (local energy advice partnership): Provides free energy advice and money-saving support. These services can help you understand your eligibility, navigate application processes, and offer personalised guidance.

The role of thinktank recommendations in UK energy policy

The recent proposal by the Resolution Foundation for a £175 energy bill reduction for low-income households underscores the ongoing debate around energy affordability. Thinktank recommendations like this play a crucial role in highlighting policy gaps and proposing targeted interventions to address societal challenges such as fuel poverty. While not yet implemented policy, such proposals often influence future government decisions and policy development.

Empowering your household with energy control and capability

Fuse Energy empowers low-income customers to regain control and capability over their energy use and finances by providing comprehensive guidance on available support and practical energy management, supported by 24/7 human customer service. By understanding the support available and implementing energy-saving measures, you can create 'surplus' in your household budget, moving beyond a scarcity mindset to one of financial advantage. Fuse's 24/7 human customer support is available to help you understand your bills, explore payment options, and signpost you to relevant grants. Click here to switch to Fuse Energy today. Find out about our mission by clicking here.

References

1. The Guardian. Cut £175 from energy bills for low-income homes, says thinktank