London Daily

Focus on the big picture.
Sunday, May 31, 2026

Cost of living: Who is proposing what to tackle soaring energy bills faced by struggling households?

Cost of living: Who is proposing what to tackle soaring energy bills faced by struggling households?

Pressure is mounting on the two Conservative candidates for prime minister to put forward detailed proposals as political opponents and some of the UK's biggest power companies outline their own plans to curb rocketing gas and electricity prices.

Spiralling energy bills have led to demands for immediate increased government action to help struggling families.

Pressure is mounting on the two Conservative candidates vying to be the next prime minister to put forward detailed proposals as political opponents and some of the UK's largest power companies have outlined their own plans to curb soaring gas and electricity prices.

Boris Johnson has stressed he will leave decisions on further support to his Downing Street successor, who will not be announced until 5 September.

The average annual household energy bill is expected to top £5,000 by the spring.

So who is proposing what to deal with the cost of living crisis?

Tory leadership contenders


Liz Truss, the frontrunner in the race, has said her priority is to cut taxes to help people cope with the sharp rise in energy prices rather than further "handouts", but has insisted that she has not ruled out additional direct payments.

However, critics argue tax cuts would benefit the wealthy over the hardest hit.

The foreign secretary has also pledged to temporarily halt the green levies that households pay to ensure renewable energy generation is funded.

Yet cutting the payments could derail the UK's path to net zero and leave the government open to legal action while only seeing limited benefit, critics have said.

Slashing the two main green parts of the energy bill - the renewables obligation and the green gas levy - would only save around £80, according to energy consultancy Auxilione.

Ms Truss's rival, Rishi Sunak, has said if he becomes prime minister he will extend the scheme he launched in May that provided every household with £400 off this winter's fuel costs, rising to £1,200 for pensioners and those on benefits.

The former chancellor said his plan would slash rising energy bills for up to 16 million vulnerable people and in a swipe at his opponent dismissed "the boosterish talk of others", adding that "you can't heat your home with hope".

He has also proposed to cut VAT on household energy bills, although this would only provide limited relief to households, especially those most in need of help, while also generating less cash for the stretched public finances.

Labour


Looking to fill the vacuum in Number 10, opposition leader Sir Keir Starmer has set out a £29bn emergency plan to stop energy bills rising over the winter, which would be funded in part by an extension of the windfall tax on the bumper profits of oil and gas companies.

He said his proposal would save the typical family £1,000 immediately, get energy costs under control for the future and help tackle inflation.

To pay for the measures, Labour said it would close a "loophole" in the levy on the profits of the energy companies announced by Mr Sunak in May when he was chancellor, and backdate the start to January.

The price freeze would also mean Labour would not go ahead with the £400 rebate on energy bills that the government had promised all households in October to dampen the impact of rising prices.

The Institute for Fiscal Studies has questioned Labour's proposed funding for the support package, arguing some of its calculations are an "illusion".

Liberal Democrats


The Liberal Democrats have pressed the government to recall MPs to Westminster and cancel the rise in the energy price cap, which threatens to top more than £4,000 in the new year.

The party would make up the difference by levying an even bigger windfall tax on oil and gas companies.

The Lib Dems have suggested increasing the rate from 25% to 30%, expanding it to cover profits dating from last October, and for it to cover a bigger share of what companies make globally.

Energy companies


Major energy suppliers Scottish Power and Eon have proposed the setting up of a special "deficit" fund that would allow the industry to freeze customers' bills for two years.

Using commercial loans, backed by a government guarantee, utility firms would cap the bills of customers on default tariffs, and fund the shortfall with the wholesale price by drawing down from the central pot.

The loans would be repaid in the longer term by suppliers adding a small levy to customers' bills or through taxation.

It is estimated it would need about £50bn from the banks to cover all 22 million households on default tariffs.

Other countries


The UK is not the only nation struggling to deal with the financial fallout of rising energy costs, fanned by supply fears after Russia's invasion of Ukraine.

At the start of the year, the French government forced the state-owned energy provider, Électricité de France, to cap electricity tariff rises at 4%.

In addition to one-off payments to poorer households, it has also reduced taxes on electricity.

Spain has cut VAT on energy bills from 21% to 10%, funded through a windfall tax on energy companies.

A fuel subsidy plan in Italy aims to enable families to keep their fuel bills at around 2021 levels.

Alongside a package of financial support measures in Germany, where households pay more for electricity than any other country in the EU, the government has also taken a series of steps to reduce energy demand, including dimming street lights, turning off fountains and lowering the temperature in public swimming pools.

Newsletter

Related Articles

0:00
0:00
Close
Japanese Technology Firm Fujitsu Launches Advanced Artificial Intelligence Tool for Corporate Disclosures
South Africa Officially Launches Nationwide Campaign for Highly Contested Local Government Elections
United Kingdom Commits Additional Funding for Unexploded Ordnance Clearance in Laos
Singapore Announces Stringent New Greenhouse Gas Regulations for Commercial Cooling Systems
Cambodia and Thailand Hold High-Level Border Security Talks at United Nations Headquarters
Myanmar Military Government and China Sign Major Agreement to Upgrade Media and Cultural Cooperation
Knife Attack at Swiss Train Station Leaves Three Injured in Suspected Act of Domestic Terrorism
Transnational Extortion Gang Threatens Canadian Police With Army of One Thousand Armed Operatives
Australia Imposes Forty-Two-Day Quarantine on Cruise Ship Passengers Following Deadly Hantavirus Outbreak
International Monetary Fund Unlocks Seven Hundred Million United States Dollars for Sri Lanka Following Economic Reforms
Australia Launches Record One Point Four Billion Dollar Lawsuit Against Chemical Giant 3M Over Contamination
China and Canada Foreign Ministers Meet in Ottawa in Effort to Stabilize Strained Diplomatic Ties
Indonesia Demands Urgent United Nations Security Council Reform Amid Escalating Global Conflicts
Extreme Weather Patterns Trigger Severe Drought in Madagascar and Destructive Flooding in East Africa
Indian State of Karnataka Faces Political Upheaval as Chief Minister Siddaramaiah Abruptly Resigns
Philippines and Japan Reaffirm Defense Ties as Crucial for Indo-Pacific Regional Stability
Norway Joins French Nuclear Deterrence Initiative in Major Shift for European Security Architecture
Global Critical Mineral Alliances Expand as Western Nations Move to Counter Chinese Supply Dominance
United States Imposes Fifty Percent Tariffs on Mexican Steel and Aluminum Ahead of Trade Pact Review
European Union and China Head Toward Major Trade Conflict Over Clean Technology Exports
United States Economic Growth Severely Downgraded to One Point Six Percent as Stagflation Fears Mount
World Health Organization Warns Central African Ebola Epidemic is Outpacing Containment Efforts
United States Treasury Department Conditions Sanctions Relief on Reopening of the Strait of Hormuz
Iranian Air Defenses Intercept and Destroy United States Military Drone Over Bushehr Province
Iranian Armed Forces Launch Ballistic Missiles Toward Unspecified Targets Prompting Regional Condemnation
United Nations Secretary-General Warns Global Order Facing Highest Level of Conflict Since 1945
Israel Issues Sweeping Evacuation Orders in Southern Lebanon Amid Intensified Hezbollah Conflict
Russia Announces Systemic Military Strikes Targeting Ukrainian Defense and Energy Infrastructure
United States and Iranian Negotiators Reach Draft Agreement to Extend Ceasefire and Resume Nuclear Talks
United Nations Security Council Deeply Divided Over United States Capture of Venezuelan President
US and Iran Exchange Direct Military Strikes Amid Fragile Gulf Ceasefire
World Health Organization Warns of Catastrophic Ebola Outbreak in DR Congo
Russia Threatens New Wave of Strikes on Ukrainian Infrastructure and Embassies
Scientists Warn Atlantic Ocean Currents Could Collapse Faster Than Projected
Anthropic Reaches $900 Billion Valuation in Historic AI Funding Round
Washington Imposes Crippling Sanctions on Iranian Maritime Authority
Japan and the Philippines Initiate Strategic Intelligence-Sharing Pact
Microsoft Deploys Autonomous Computer-Using AI Agents to Global Markets
Anthropic Secures $45 Billion Compute Infrastructure Agreement With SpaceX
U.S. Director of National Intelligence Resigns Amid Administration Shakeup
Micron Technology Crosses Trillion-Dollar Valuation Amid Unprecedented Hardware Demand
Canada and Germany Finalize Historic Long-Term LNG Export Agreement
China Expands International Travel Restrictions on Domestic AI Researchers
Japan Approves Sweeping Overhaul of National Intelligence Apparatus
Global Airlines Scramble Logistics as Middle East Airspace Remains Fractured
Japan's Naphtha Imports Plunge 47 Percent Amid Strait of Hormuz Closure
Global Crude Prices Retreat Below $96 as Gulf Tensions Momentarily Ease
Generative AI Outperforms Human Baselines in Landmark Global Creativity Study
NASA Partners With Private Aerospace to Unveil Permanent Lunar Base Architecture
South Korean Equity Markets Surge on Next-Generation Memory Chip Frenzy
×