Households could save £175 on gas and electricity bills under discount scheme proposal

Households could save £175 on gas and electricity bills under discount scheme proposal Lower-earning households could save £175 on their gas and electricity bills this winter under proposals for a new temporary discount scheme presented to Andy Burnham Lower-earning households could save £175 on their gas and electricity bills this winter under proposals for a new temporary discount scheme presented to Andy Burnham. Leading think tank the Resolution Foundation warned the Government has no way of supporting struggling Brits with households aside from the benefits system. It urged ministers to ensure they have an effective scheme ready to switch on to support those vulnerable to bill hikes this winter, particularly for the January to March period next year, to soften any gas price shocks this winter from the war in Iran. The Foundation calls the Government to apply a temporary discount to gas and electricity unit prices for households in need. The think tank says it "does not make sense to rely on further universal support, where the richer half of the population get more than half the benefit". But it acknowledges that targeted support is also "harder than it sounds", pointing to the Warm Home Discount only reaching around a quarter of British households. Given this, support should be expanded beyond those on means-tested benefits and should include households passing an income test assessed on the highest-income individual in the household, the think tank says. Its analysis shows a threshold at £24,000 salary per year would mean support would go to around 40% of all households and reach over four-fifths (83%) of those in the poorest fifth of the population. Such a scheme would cost £2billion and would provide an average discount of £175 per eligible household, it adds. A tiered system could go even further, paying around £220 to those with incomes below £18,000, and £85 to those between £18,000 and £24,000, albeit at the cost of additional complexity, researchers said. The Foundation admits any scheme would not be perfect. For instance, single-earner households above the threshold might fall through the cracks, most likely to be working-age couples with children. It says mitigations could be put in place such as a more generous income threshold for households with children. Overall, it said the Government should seek to develop a more robust scheme for future crises, including looking at automatic enrolment via HMRC data, as opposed to self-declaration. Experts made the demand as their analysis showed that poorer households have not recovered from gas cuts made following the invasion of Ukraine in 2022. The Foundation said lower-income areas cut back their gas use by 15% more than higher-income areas, yet two years later, only one-sixth of this fall in consumption had been reversed, suggesting that these households are still heating their homes less than is comfortable. Jonathan Marshall, principal economist at the Resolution Foundation, said: "The last energy crisis pushed families in the poorest places to cut their heating by more than those in the richest, with most still not warming their homes as much as they used to – and a fresh price spike this winter risks driving them lower still. "The Government can get ahead of this, if it acts now. A targeted energy discount could save eligible households £175 a year and reach over four-fifths of the poorest families, while expanding support beyond just those on means-tested benefits.” He added: "Successive governments have failed to build a robust system for dealing with household energy prices. But with ongoing uncertainty in the Middle East meaning there is still considerably volatility in energy markets, the Government must act now to have a targeted scheme ready to switch on by January 2027, so that support reaches struggling families quickly when they need it most." In one of his first acts as PM, Andy Burnham announced VAT on electricity bills will be removed in a move that is expected to knock £45 off the average bill. A DESNZ spokeswoman said: “The Energy Secretary’s focus is bringing bills down for good. We will tackle the cost of living to make life's essentials affordable again and bring back hope.”