London Daily

Focus on the big picture.
Friday, Jun 20, 2025

Liz Truss energy bills cap will fail to protect poorest, say thinktanks

Liz Truss energy bills cap will fail to protect poorest, say thinktanks

Wealthy households with big bills will be among those to benefit most from ‘very poorly targeted’ package
Government plans to cap energy bills are “poorly targeted” and will fail to protect low-income families without a package of additional support, charities and thinktanks have warned.

Liz Truss is expected to announce a package to cap average household energy bills on Thursday, alongside subsidies for small and medium-sized businesses, after concerns the increasing cost of gas and electricity is on course to push inflation towards 20% next year.

The central plank of the newly installed prime minister’s widely trailed plan is expected to be a freeze on the unit cost of gas and electricity for all households, capping the average bill at about £2,500 a year.
Last month

the regulator Ofgem said an increase in the cap would increase the average gas and electricity bill from £1,971 to £3,549 a year, before a possible increase to more than £5,000 in January.

Leading thinktanks said ministers should adopt a scheme that limited the benefit to wealthier households.

Paul Johnson, director of the Institute for Fiscal Studies, described the package as “very poorly targeted” after it emerged high earners with large energy bills would be among those to benefit most.

He said: “If this is a straightforward bill freeze then the majority of the money will go to better-off people who use more energy. So this is very poorly targeted.

“Finding a way of targeting it to the many, many millions who really need it, without giving it to the many, many millions who don’t, appears to be something that has stumped the Treasury and the government for finding a mechanism of achieving that.”

The National Institute for Economic and Social Research (NIESR) has put forward a “variable price cap” to reduce energy bills for lower-income households in the UK “while higher earners, who consume more energy, would bear a commensurate share of the higher costs”.

Under the scheme, the average energy bill for the poorest consumers would come down from almost £3,000 to about £1,000 a year, the thinktank said, reducing the annual cost by 70%.

Low-income households with a large number of dependents and those living in poorly insulated homes would receive a supplementary benefit through universal credit or cash transfers, NIESR said.

An alternative price cap devised by the Resolution Foundation, based on a “social tariff”, would protect poor households that were also heavy users of energy, including those people with disabilities, the thinktank said.

The thinktank’s chief executive, Torsten Bell, said a 30% bill reduction for people on benefits would cost £15bn, “but benefit 94% of the poorest half of households”.

Peter Matejic, energy analyst at the Joseph Rowntree Foundation, said the government scheme would protect most low-income households from rising energy bills, but the bottom 20% of earners faced paying an extra £1,000 to cover the rising cost of food and other essential items.

Poor households that were also heavy users of energy would also be left with high bills, putting pressure on the government to supplement the cap, he said.

Johnson, who said the UK government could afford to borrow £100bn to tackle the cost of living crisis, complained that the universal cap undermined efforts to persuade households to use less energy. He said: “The reason that gas prices are so high is because there is less gas around and if the world doesn’t use less gas over the next year then we’re going to run out.”

Max Mosley, an economist at NIESR, said the high cost of freezing all energy bills “would place enormous pressure on public finances”. He said: “A reform to the energy price cap would be as effective in reducing the energy bills for the poorest but would likely require no further fiscal resources to fund it.”

Truss has ruled out an increase in the windfall tax on oil and gas producers beyond the £5bn already planned by the Treasury.
Newsletter

Related Articles

0:00
0:00
Close
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Vietnam Emerges as Luxury Yacht Destination for Ultra‑Rich
Plans to Sell Dutch Embassy in Bangkok Face Local Opposition
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump's $5 Million 'Trump Card' Visa Program Draws Nearly 70,000 Applicants
DGCA Finds No Major Safety Concerns in Air India's Boeing 787 Fleet
Airlines Reroute Flights Amid Expanding Middle East Conflict Zones
Elon Musk's xAI Seeks $9.3 Billion in Funding Amid AI Expansion
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Taiwan Imposes Export Ban on Chips to Huawei and SMIC
Israel has just announced plans to strike Tehran again, and in response, Trump has urged people to evacuate
Netanyahu Signals Potential Regime Change in Iran
Juncker Criticizes EU Inaction on Trump Tariffs
EU Proposes Ban on New Russian Gas Contracts
Analysts Warn Iran May Resort to Unconventional Warfare
Iranian Regime Faces Existential Threat Amid Conflict
Energy Infrastructure Becomes War Zone in Middle East
UK Home Secretary Apologizes Over Child Grooming Failures
Trump Organization Launches 5G Mobile Network and Golden Handset
Towcester Hosts 2025 English Greyhound Derby Amid Industry Scrutiny
Gary Oldman and David Beckham Knighted in King's Birthday Honours
Over 30,000 Lightning Strikes Recorded Across UK During Overnight Storms
Princess of Wales Returns to Public Duties at Trooping the Colour
Red Arrows Use Sustainable Fuel in Historic Trooping the Colour Flypast
Former Welsh First Minister Addresses Unionist Concerns Over Irish Language
Iran Signals Openness to Nuclear Negotiations Amid Ongoing Regional Tensions
France Bars Israeli Arms Companies from Paris Defense Expo
King Charles Leads Tribute to Air India Crash Victims at Trooping the Colour
Jack Pitchford Embarks on 200-Mile Walk to Support Stem Cell Charity
Surrey Hikers Take on Challenge of Climbing 11 Peaks in a Single Day
UK Deploys RAF Jets to Middle East Amid Israel-Iran Tensions
Two Skydivers Die in 'Tragic Accident' at Devon Airfield
Sainsbury's and Morrisons Accused of Displaying Prohibited Tobacco Ads
UK Launches National Inquiry into Grooming Gangs
Families Seek Closure After Air India Crash
Gold Emerges as Global Safe Haven Amid Uncertainty
Trump Reports $57 Million Earnings from Crypto Venture
Trump's Military Parade Sparks Concerns Over Authoritarianism
Nationwide 'No Kings' Protests Challenge Trump's Leadership
UK Deploys Jets to Middle East Amid Rising Tensions
Trump's Anti-War Stance Tested Amid Israel-Iran Conflict
Germany Holds First Veterans Celebration Since WWII
U.S. Health Secretary Dismisses CDC Vaccine Advisory Committee
Minnesota Lawmaker Melissa Hortman and Husband Killed in Targeted Attack; Senator John Hoffman and Wife Injured
Exiled Iranian Prince Reza Pahlavi Urges Overthrow of Khamenei Regime
×