London Daily

Focus on the big picture.
Thursday, Oct 08, 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
Britain Maintains Diplomatic Mission in East Jerusalem Despite Israeli Closure Deadline
English Councils Push Government to Rethink Proposed Funding Cuts
Scottish Homebuilding Falls to Lowest Level in 11 Years
BBC Chief Matt Brittin Defends Restructuring as Staff Challenge Job Cuts
UK Finance Warns High Energy Costs and Bond Yields Are Complicating Fiscal Outlook
UK Adopts All 44 Recommendations on Regulating AI in Healthcare
Chancellor John Healey Prepares Autumn Budget as Borrowing Costs Strain Public Finances
UK Investigators See Strong Indications of Iranian Link After RAF Fairford Security Operation
Laura Trott Pledges Tighter Controls on Political Activism in UK Classrooms
Welsh Ministers Launch Long-Term Review of North Wales and Anglesey Crossings
Welsh Government Orders 18-Month Study of Road Solutions Around Newport
Reform UK MP Sarah Pochin Faces Scrutiny Over £800,000 Second Home Purchase
British Households Grow More Concerned About Fuel and Energy Prices
NHS Leaders Warn of Rising Winter Pressure on Emergency Departments
Kemi Badenoch Proposes £2.3 Billion Employer National Insurance Cut for Young Workers
Middle East Conflict Could Erase UK Fiscal Headroom, Economists Warn
Manchester City Found Guilty of Multiple Premier League Financial Rule Breaches
UK Security Services Find Strong Indications of Iranian Role in RAF Fairford Incident
Costa Coffee Returns to Operating Profit on Iced Drinks and Menu Changes
Asos Warns Customers After Unauthorized Access to Retail App and Data
Kemi Badenoch Puts Growth and Deregulation at Center of Conservative Conference
Campaigners Warn of Deepening Social Care Crisis for Disabled Adults
Study Finds Rising Early-Onset Cancer Rates Among Adults Under 50 in Britain
UK Coach Operators Warn High Diesel Prices Could Force Route Cuts
FCA Opens Independent Review Into Handling of Epstein-Linked Whistleblower Case
Argentina Vows to Block Falkland Islands Offshore Oil Development
UK Chancellor Prepares Fiscal Measures and Welfare Reforms Ahead of Autumn Budget
Sainsbury’s and Morrisons Explore Potential Multi-Billion-Pound Merger
UK Weighs Tariffs on Chinese Electric Vehicles to Align With European Union
UK Threatens Diplomatic Expulsions Over Planned Closure of East Jerusalem Consulate
UK Energy Price Cap Hits Three-Year High as Middle East Conflict Raises Costs
Seventh Arrest Made in Suspected Terror Plot at RAF Fairford
Systemic Education Collapse Sparks Mass Student Uprisings in France
Green Party Faces Backlash Over Resolution Equating Zionism With Racism
Conservatives Debate Scrapping Environmental Rules for New Homes
Cornwall Insight Warns UK Energy Bills Could Approach £2,000 This Winter
UK Coach Operators Warn of Service Cuts as Diesel Prices Exceed £2
Scottish Parliament Approves £68 Billion Budget With New Tax and Property Measures
FCA Opens Independent Review Into Handling of Epstein Whistleblower
UK Government Drops Plan to Suspend Jury Trials in England and Wales
Bank of England Holds Interest Rate at 3.75% as Markets Watch November
Two Iranian Nationals Charged Over Alleged Plot Targeting Manchester Jewish Community
UK Fiscal Headroom Halves to £11 Billion Ahead of Budget, EY Warns
US Bomber Withdrawal From RAF Fairford Prompts UK Security Review
Sarah Wakfer Appointed Chair of Northern Ireland’s Health and Care Regulator
Scotland Housing Completions Fall to 11-Year Low Amid National Shortage
UK Water Companies Face Tougher Oversight and Unannounced Regulatory Inspections
Middle East Conflict Pushes UK Fuel and Wholesale Energy Prices Higher
Andy Burnham Raises Prospect of Second Brexit Referendum in Review of UK-EU Relations
EY Warns UK Fiscal Headroom Has Halved to £11 Billion Ahead of Autumn Budget
×