London Daily

Focus on the big picture.
Wednesday, Dec 10, 2025

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
UK Officials Push Back at Trump Saying European Leaders ‘Talk Too Much’ About Ukraine
UK Warns of Escalating Cyber Assault Linked to Putin’s State-Backed Operations
UK Consumer Spending Falters in November as Households Hold Back Ahead of Budget
UK Orders Fresh Review of Prince Harry’s Security Status After Formal Request
U.S. Authorises Nvidia to Sell H200 AI Chips to China Under Security Controls
Trump in Direct Assault: European Leaders Are Weak, Immigration a Disaster. Russia Is Strong and Big — and Will Win
"App recommendation" or disguised advertisement? ChatGPT Premium users are furious
"The Great Filtering": Australia Blocks Hundreds of Thousands of Minors From Social Networks
Mark Zuckerberg Pulls Back From Metaverse After $70 Billion Loss as Meta Shifts Priorities to AI
Nvidia CEO Says U.S. Data-Center Builds Take Years while China ‘Builds a Hospital in a Weekend’
Indian Airports in Turmoil as IndiGo Cancels Over a Thousand Flights, Stranding Thousands
Hollywood Industry on Edge as Netflix Secures Near-$60 Bln Loan for Warner Bros Takeover
Drugs and Assassinations: The Connection Between the Italian Mafia and Football Ultras
Hollywood megadeal: Netflix acquires Warner Bros. Discovery for 83 billion dollars
The Disregard for a Europe ‘in Danger of Erasure,’ the Shift Toward Russia: Trump’s Strategic Policy Document
Two and a Half Weeks After the Major Outage: A Cloudflare Malfunction Brings Down Multiple Sites
UK data-regulator demands urgent clarity on racial bias in police facial-recognition systems
Labour Uses Biscuits to Explain UK Debt — MPs Lean Into Social Media to Reach New Audiences
German President Lays Wreath at Coventry as UK-Germany Reaffirm Unity Against Russia’s Threat
UK Inquiry Finds Putin ‘Morally Responsible’ for 2018 Novichok Death — London Imposes Broad Sanctions on GRU
India backs down on plan to mandate government “Sanchar Saathi” app on all smartphones
King Charles Welcomes German President Steinmeier to UK in First State Visit by Berlin in 27 Years
UK Plans Major Cutback to Jury Trials as Crown Court Backlog Nears 80,000
UK Government to Significantly Limit Jury Trials in England and Wales
U.S. and U.K. Seal Drug-Pricing Deal: Britain Agrees to Pay More, U.S. Lifts Tariffs
UK Postpones Decision Yet Again on China’s Proposed Mega-Embassy in London
Head of UK Budget Watchdog Resigns After Premature Leak of Reeves’ Budget Report
Car-sharing giant Zipcar to exit UK market by end of 2025
Reports of Widespread Drone Deployment Raise Privacy and Security Questions in the UK
UK Signals Security Concerns Over China While Pursuing Stronger Trade Links
Google warns of AI “irrationality” just as Gemini 3 launch rattles markets
Top Consultancies Freeze Starting Salaries as AI Threatens ‘Pyramid’ Model
Macron Says Washington Pressuring EU to Delay Enforcement of Digital-Regulation Probes Against Meta, TikTok and X
UK’s DragonFire Laser Downs High-Speed Drones as £316m Deal Speeds Naval Deployment
UK Chancellor Rejects Claims She Misled Public on Fiscal Outlook Ahead of Budget
Starmer Defends Autumn Budget as Finance Chief Faces Accusations of Misleading Public Finances
EU Firms Struggle with 3,000-Hour Paperwork Load — While Automakers Fear De Facto 2030 Petrol Car Ban
White House launches ‘Hall of Shame’ site to publicly condemn media outlets for alleged bias
UK Budget’s New EV Mileage Tax Undercuts Case for Plug-In Hybrids
UK Government Launches National Inquiry into ‘Grooming Gangs’ After US Warning and Rising Public Outcry
Taylor Swift Extends U.K. Chart Reign as ‘The Fate of Ophelia’ Hits Six Weeks at No. 1
250 Still Missing in the Massive Fire, 94 Killed. One Day After the Disaster: Survivor Rescued on the 16th Floor
Trump: National Guard Soldier Who Was Shot in Washington Has Died; Second Soldier Fighting for His Life
UK Chancellor Reeves Defends Tax Rises as Essential to Reduce Child Poverty and Stabilise Public Finances
No Evidence Found for Claim That UK Schools Are Shifting to Teaching American English
European Powers Urge Israel to Halt West Bank Settler Violence Amid Surge in Attacks
"I Would Have Given Her a Kidney": She Lent Bezos’s Ex-Wife $1,000 — and Received Millions in Return
European States Approve First-ever Military-Grade Surveillance Network via ESA
UK to Slash Key Pension Tax Perk, Targeting High Earners Under New Budget
UK Government Announces £150 Annual Cut to Household Energy Bills Through Levy Reforms
×