London Daily

Focus on the big picture.
Friday, Jan 16, 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
Prince Harry Returns to UK High Court as Final Privacy Trial Against Daily Mail Publisher Begins
Britain Confronts a Billion-Pound Wind Energy Paradox Amid Grid Constraints
The graduate 'jobpocalypse': Entry-level jobs are not shrinking. They are disappearing.
Cybercrime, Inc.: When Crime Becomes an Economy. How the World Accidentally Built a Twenty-Trillion-Dollar Criminal Economy
The Return of the Hands: Why the AI Age Is Rewriting the Meaning of “Real Work”
UK PM Kier Scammer Ridicules Tories With "Kamasutra"
Strategic Restraint, Credible Force, and the Discipline of Power
United Kingdom and Norway Endorse NATO’s ‘Arctic Sentry’ Mission Including Greenland
Woman Claiming to Be Freddie Mercury’s Secret Daughter Dies at Forty-Eight After Rare Cancer Battle
UK Launches First-Ever ‘Town of Culture’ Competition to Celebrate Local Stories and Boost Communities
Planned Sale of Shell and Exxon’s UK Gas Assets to Viaro Energy Collapses Amid Regulatory and Market Hurdles
UK Intensifies Arctic Security Engagement as Trump’s Greenland Rhetoric Fuels Allied Concern
Meghan Markle Could Return to the UK for the First Time in Nearly Four Years If Security Is Secured
Meghan Markle Likely to Return to UK Only if Harry Secures Official Security Cover
UAE Restricts Funding for Emiratis to Study in UK Amid Fears Over Muslim Brotherhood Influence
EU Seeks ‘Farage Clause’ in Brexit Reset Talks to Safeguard Long-Term Agreement Stability
Starmer’s Push to Rally Support for Action Against Elon Musk’s X Faces Setback as Canada Shuns Ban
UK Free School Meals Expansion Faces Political and Budgetary Delays
EU Seeks ‘Farage Clause’ in Brexit Reset Talks With Britain
Germany Hit by Major Airport Strikes Disrupting European Travel
Prince Harry Seeks King Charles’ Support to Open Invictus Games on UK Return
Washington Holds Back as Britain and France Signal Willingness to Deploy Troops in Postwar Ukraine
Elon Musk Accuses UK Government of Suppressing Free Speech as X Faces Potential Ban Over AI-Generated Content
Russia Deploys Hypersonic Missile in Strike on Ukraine
OpenAI and SoftBank Commit One Billion Dollars to Energy and Data Centre Supplier
UK Prime Minister Starmer Reaffirms Support for Danish Sovereignty Over Greenland Amid U.S. Pressure
UK Support Bolsters U.S. Seizure of Russian-Flagged Tanker Marinera in Atlantic Strike on Sanctions Evasion
The Claim That Maduro’s Capture and Trial Violate International Law Is Either Legally Illiterate—or Deliberately Deceptive
UK Data Watchdog Probes Elon Musk’s X Over AI-Generated Grok Images Amid Surge in Non-Consensual Outputs
Prince Harry to Return to UK for Court Hearing Without Plans to Meet King Charles III
UK Confirms Support for US Seizure of Russian-Flagged Oil Tanker in North Atlantic
Béla Tarr, Visionary Hungarian Filmmaker, Dies at Seventy After Long Illness
UK and France Pledge Military Hubs Across Ukraine in Post-Ceasefire Security Plan
Prince Harry Poised to Regain UK Security Cover, Clearing Way for Family Visits
UK Junk Food Advertising Ban Faces Major Loophole Allowing Brand-Only Promotions
Maduro’s Arrest Without The Hague Tests International Law—and Trump’s Willingness to Break It
German Intelligence Secretly Intercepted Obama’s Air Force One Communications
The U.S. State Department’s account in Persian: “President Trump is a man of action. If you didn’t know it until now, now you do—do not play games with President Trump.”
Fake Mainstream Media Double Standard: Elon Musk Versus Mamdani
HSBC Leads 2026 Mortgage Rate Cuts as UK Lending Costs Ease
US Joint Chiefs Chairman Outlines How Operation Absolute Resolve Was Carried Out in Venezuela
Starmer Welcomes End of Maduro Era While Stressing International Law and UK Non-Involvement
Korean Beauty Turns Viral Skincare Into a Global Export Engine
UK Confirms Non-Involvement in U.S. Military Action Against Venezuela
UK Terror Watchdog Calls for Australian-Style Social Media Ban to Protect Teenagers
Iranian Protests Intensify as Another Revolutionary Guard Member Is Killed and Khamenei Blames the West
Delta Force Identified as Unit Behind U.S. Operation That Captured Venezuela’s President
Europe’s Luxury Sanctions Punish Russian Consumers While a Sanctions-Circumvention Industry Thrives
Berkshire’s Buffett-to-Abel Transition Tests Whether a One-Man Trust Model Can Survive as a System
Fraud in European Central Bank: Lagarde’s Hidden Pay Premium Exposes a Transparency Crisis at the European Central Bank
×