The bulk of the \u00a31bn the chancellor is planning to spend helping energy consumers will likely to go towards increasing the discount given to households on certain benefits. Photograph: Danny Lawson\/PAView image in fullscreenThe bulk of the \u00a31bn the chancellor is planning to spend helping energy consumers will likely to go towards increasing the discount given to households on certain benefits. Photograph: Danny Lawson\/PAChancellor plans major intervention to help poorer UK households with rising energy billsExclusive: Officials working on further radical changes that would change how much energy companies could charge customersJohn Healey is considering a major intervention to cut energy bills for poorer households at this month\u2019s budget, after ministers became alarmed at forecasts which show bills rising by hundreds of pounds in January.The chancellor is working on plans to spend more than \u00a31bn to help energy consumers, the bulk of which is likely to go towards increasing the discount given to households on certain benefits.Sources say final decisions have not been made, but Healey is set to rebuff a call by the energy secretary, Miatta Fahnbulleh, to spend billions more on removing levies from bills altogether.Energy officials are working up more radical changes to bills, however, which could be implemented after the budget and would change how much companies could charge customers, rather than subsidising their bills.If approved, the energy discount will form a major plank of the budget, which government sources say will be low-key but focused on reducing voters\u2019 cost of living.Labour figures uneasy about Healey\u2019s \u2018underpowered\u2019 approach to budgetRead moreThe chancellor is facing a cash crunch as he looks for money to fund an additional \u00a34.7bn in defence spending and to rebuild his fiscal buffer, which has been eroded by higher borrowing costs.He is likely to raise taxes to pay for the additional spending, and is rumoured to be looking at higher bank taxes in particular.Government sources had previously insisted the VAT cut to electricity bills which Andy Burnham announced soon after becoming prime minister would be the last support to be offered this year.But they have become increasingly concerned by forecasts showing that the Iran war will push the energy price cap up by as much as \u00a3442 in January \u2013 entirely eroding the impact of the VAT cut.As a result Healey has been considering submissions from the energy department on how to ease the pressures on households in the coming months.The most likely solution is understood to be increasing the warm homes discount \u2013 a \u00a3150 discount to energy bills offered to households on certain benefits.Healey is understood to be considering increasing this by a further \u00a3100, which would be funded by taxpayers, rather than bill-payers as the existing discount is.Fahnbulleh, meanwhile, has been pushing for more sweeping action to reduce bills for all consumers by as much as \u00a3120 by removing all levies.Under the energy secretary\u2019s proposals, the levies, which fund renewable energy and efficiency schemes, would be paid for through taxation instead.She told the Guardian last week: \u201cIf we want a system that is resilient, if we want a system that can cope, if we want a system that ultimately can deliver the diversity of energy that we want, what is the fairest way in which we pay for it?\u201cThat is both across the exchequer versus our bill-payers, and then within our bill-payers. So we have to ask that question.<\/p>\n
Every other country is asking that question, and ultimately we\u2019ve got to come to a fair deal.\u201dRemoving levies from bills would reduce inflation, but would cost as much as \u00a33.2bn and would be difficult for the government to unwind should energy costs come down in the future.Officials in the energy department are working on more radical proposals for after the budget, meanwhile, including proposals to reduce tariffs for poorer households or ones that use less energy.Burnham told the Labour conference last week: \u201cBritish businesses and bill-payers pay some of the highest energy costs in Europe. Within 10 years, I want those costs to be in line with our neighbours.\u201cThis means reforming a broken energy market so it better serves the public interest.\u201dA so-called \u201csocial tariff\u201d would force energy companies to charge poorer households less for each unit of electricity they consume than richer ones.Creating such a scheme, however, would involve a large amount of data collection from tax authorities, the Treasury and energy companies \u2013 an exercise likely to take far longer than the next few weeks.An alternative plan, known as a \u201crising block tariff\u201d, would also vary the tariffs which energy companies can charge, but by consumption levels rather than income.The idea, which was proposed by the New Economics Foundation (NEF) thinktank when Fahnbulleh ran it, would charge consumers less for a set amount of \u201cessential\u201d use and more once their consumption crossed that level.Healey urged to offer energy support in budget as bills rise 4%Read moreAlex Chapman, head of economic and environmental policy at NEF, said: \u201cA serious price spike is coming, and without action, bills will exceed the peak of the last crisis. The government must use the budget to put in place both targeted support for the most vulnerable and, critically, a safety net for all.\u201dHe added: \u201cRepeated crises have exposed the flaws in our privatised energy system \u2013 these can only be fixed by fundamental reform. This means capturing the benefits of cheap renewables and offering every household a \u2018block\u2019 of essential energy at a truly protected and affordable price.\u201dAlfie Stirling, economist and director of policy at the Joseph Rowntree Foundation, said: \u201cEnergy support for this winter needs to tick three boxes.<\/p>\n
It needs to support the majority of households; within this, it needs to target the most support towards those in greatest need; and \u2013 as far as possible \u2013 it needs to actually lower the price, thereby bringing down inflation.\u201cThe UK does not yet have the right toolkit to respond effectively to energy price shocks \u2013 building better tools is now a critical priority for our future security and living standards.\u201dA spokesperson for the Treasury said: \u201cAs has always been the case, decisions on tax are a matter for the chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals.\u201dExplore more on these topicsEnergy billsEnergy industryConsumer affairsHousehold billsUK cost of living crisisnewsShareReuse this content<\/p>\n","protected":false},"excerpt":{"rendered":"
The bulk of the \u00a31bn the chancellor is planning to spend helping energy consumers will likely to go towards increasing the discount given to households on certain benefits. Photograph: Danny Lawson\/PAView image in fullscreenThe bulk\u2026<\/p>\n","protected":false},"author":1,"featured_media":24647,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-24646","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-politics"],"_links":{"self":[{"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/posts\/24646","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/comments?post=24646"}],"version-history":[{"count":0,"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/posts\/24646\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/media\/24647"}],"wp:attachment":[{"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/media?parent=24646"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/categories?post=24646"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/tags?post=24646"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}