London Daily

Focus on the big picture.
Tuesday, Jun 03, 2025

Next PM could face £23bn autumn spend to cover £900 rise in energy bills

Next PM could face £23bn autumn spend to cover £900 rise in energy bills

Energy prices have soared above prediction and subsidies will require significant further spending
Ministers could face an additional £23bn price tag for covering extra household energy costs of £900 this autumn, rising to £90bn next year, a new paper by the Institute for Government has found.

The paper, looking at the options for Liz Truss or Rishi Sunak in No 10, also warned the government should plan for prolonged rises in energy bills by going a lot further in making public appeals to use less gas – for example by informing consumers about the cost savings from turning down thermostats – and in committing to building more energy efficient homes to help protect consumers.

No 10 and Kwasi Kwarteng, the business secretary and close ally of Truss, have been resisting appeals to the public to use less energy. However, the next prime minister, likely to be Truss, faces some very difficult choices on entering office on how far to subsidise energy bills.

Boris Johnson’s government has already spent £33bn on covering 90% of the then predicted increase in energy bills but soaring prices mean a further £23bn would be needed to cover average bills that are forecasted to be £900 more per household than was predicted just three months ago, according to the IfG.

It found that extending this kind of help in 2023/24 could cost the new government more than £90bn to be as generous to households again next year. Another option that could be considered for a new prime minister is insulating only the most vulnerable from higher bills.

The IfG found that offsetting energy bill increases for those on means-tested benefits would cost £800 to £900 per household, or about £6bn to £8bn in total, while extending more help to those on disability benefit and pensioners could take the total cost of support for the most vulnerable to £10bn to £12bn.

The IfG found Labour’s proposed plan of keeping the cap at its current £1,971 a year would cost the government more than £40bn for six months and would also be difficult to reverse.

The total cost of the help would necessitate huge borrowing but still some degree less than the £300bn-plus spent during the Covid pandemic.

Olly Bartrum, a senior economist at the IfG and one of the authors of the report, said: “Energy prices have risen sharply again in recent weeks and are now expected to stay higher for longer than previously expected. Deciding whether and how to help households and businesses with these costs will be one of the most urgent tasks facing the new government.

“This may require substantial extra spending this winter and even more again next year – even limiting help to the most vulnerable could cost several billion pounds. The government should also do more to encourage greater energy efficiency and reform energy markets to reduce vulnerability to high energy prices if it wants to avoid further expensive support packages in a future likely to be defined by highly volatile energy prices.”

Truss has softened her stance on what she called “handouts” to cover the cost of energy but has hinted the help could be targeted at the most vulnerable.
Newsletter

Related Articles

0:00
0:00
Close
‘Vibe Coding’ Emerges as the New DIY Trend
AI Pioneer Yoshua Bengio Warns Models Can Deceive Users
Big Four Firms Rush to Create AI Auditing Systems
Musk’s xAI Pursues $113 Billion Valuation in New Share Sale
Walmart Increases Revenue Despite Shrinking Workforce
Hims & Hers Plans UK and EU Launch of Replica Obesity Drugs
Toyota to Acquire Supplier in $33 Billion Buyout
U.S. Reduces Military Presence in Syria
Trump Demands Iran End All Uranium Enrichment in Nuclear Talks
China Accuses US of Violating Trade Truce
Panama Port Owner Balances US-China Pressures
Dutch government falls as far-right leader Wilders quits coalition
Harvey Weinstein’s Publicist Embraces Notoriety
Macron and Meloni Seek Unity Despite Tensions
Trump Administration Accused of Obstructing Deportation Cases
Newark Mayor Sues Over Arrest at Immigration Facility
Center-Left Candidate Projected to Win South Korean Presidency
Trump’s Tariffs Predicted to Stall Global Economic Growth
South Korea’s President-Elect Expected to Take Softer Line on Trump and North Korea
Trump’s China Strategy Remains a Geopolitical Puzzle
Ukraine Executes Long-Range Drone Strikes on Russian Airbases
Conservative Karol Nawrocki wins Poland’s presidential election
Study Identifies Potential Radicalization Risk Among Over One Million Muslims in Germany
Good news: Annalena Baerbock Elected President of the UN General Assembly
Apple Appeals EU Law Over User Data Sharing Requirements
South Africa: "First Black Bank" Collapses after Being Looted by Owners
Poland will now withdraw from the EU migration pact after pro-Trump nationalist wins Election
"That's Disgusting, Don’t Say It Again": The Trump Joke That Made the President Boil
Trump Cancels NASA Nominee Over Democratic Donations
Paris Saint-Germain's Greatest Triumph Is Football’s Lowest Point
OnlyFans for Sale: From Lockdown Lifeline to Eight-Billion-Dollar Empire
Mayor’s Security Officer Implicated | Shocking New Details Emerge in NYC Kidnapping Case
Hegseth Warns of Potential Chinese Military Action Against Taiwan
OPEC+ Agrees to Increase Oil Output for Third Consecutive Month
Jamie Dimon Warns U.S. Bond Market Faces Pressure from Rising Debt
Turkey Detains Istanbul Officials Amid Anti-Corruption Crackdown
Taylor Swift Gains Ownership of Her First Six Albums
Bangkok Ranked World's Top City for Remote Work in 2025
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
White House Press Secretary Criticizes Harvard Funding, Advocates for Vocational Training
France to Implement Nationwide Smoking Ban in Outdoor Spaces Frequented by Children
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
×