Chancellor plans £1bn scheme to ease energy costs for low-income UK households

The chancellor, John Healey, plans to introduce a major budget package aimed at cutting energy bills for low-income households, with a spending envelope exceeding £1 billion. The core of the proposal is an increase to the warm-homes discount, potentially adding £100 to the existing £150 benefit-linked rebate. Energy Secretary Miatta Fahnbulleh’s suggestion to eliminate all levies from bills - a move that would shift costs to the exchequer and cost up to £3.2 billion - is expected to be turned down.

Officials are also drafting longer-term reforms, such as social tariffs or rising-block tariffs, that could reshape pricing after the budget. Meanwhile, the Treasury faces a cash squeeze as it seeks revenue to cover an extra £4.7 billion in defence outlays and to restore its fiscal buffer, with higher taxes, notably on banks, under consideration.