More than 800,000 low-income households struggling with energy bills will miss out on the £100 payment announced in the Budget, according to fresh research. The one-off Household Energy Payment, announced by Chancellor John Healey, is set to benefit around 20 million households in council tax bands A to D in England, with Wales pledging to match the payment and the Scottish government planning to "replicate" it.
Scheme details and funding
The £2.6bn scheme is funded by doubling the tax on big banks' profits from 3% to 6%, running from January next year until April 2028, alongside increased taxes on high-stakes gambling machines. Payments are scheduled to land directly in bank accounts in January to help with soaring energy costs.
However, the scheme operates through the council tax system and is not means tested. New analysis from Policy In Practice found that 838,000 households currently claiming Council Tax support will not benefit from the additional help, despite facing rising energy costs in larger homes.
Impact on fuel-stressed families
The think tank revealed that official estimates show 12% of households in the bottom 30% of incomes would not be eligible for support, while 17% of "fuel-stressed" households, which spend at least 10% of family budgets on energy bills, would also lose out.
A low-income family of five or more is 1.6 times more likely to reside in a property in band E-H, compared to an average low-income household. This means that over 130,000 larger, low-income households will miss out on the £100 this winter.
Industry forecasts and criticism
Energy provider EDF predicts households will face a rise of £469 on January 1, pushing average bills to £2,192 a year, while fellow supplier E.On Next forecasts a rise of £460. John Healey said the scheme was designed "to take the pressure off in the coldest months and see people through to the spring".
Deven Ghelani, director of Policy in Practice, warned: "Over 800,000 low-income families are going to be missing out on this vital relief from high energy bills. Millions of people are [also] missing out on over £24bn of [wider] support that is going unclaimed each year because of low awareness, administrative complexity and stigma."
Campaigners have criticised the use of council tax bands, which are based on 1991 property values, and have been pushing the government to devise a fairer scheme founded on income or access to certain benefits. Policy in Practice stated: "Council tax bands are an imperfect proxy for household needs. Low-income households can live in larger, higher-band properties, and often have little choice over the size or band of property they're allocated. And increasingly, several families or generations share a home to manage costs. Conducting an analysis of families supported by our partner councils, a low-income family of five or more individuals is 1.6 times more likely to live in a property in band E-H, compared to an average low-income household. This means that over 130,000 larger, low-income households will miss out this winter."
The think tank also uncovered that 84% of households failing to qualify for the £100 handout are home to a disabled person, have children, or are living below the poverty line. Households on lower incomes are also less likely to pay their bills via direct debit, meaning the cash won't land in their accounts automatically.
Mr Ghelani further warned that many low-income households were already overdrawn, suggesting the support intended to ease heating costs would simply be swallowed up by existing debt. He announced at the budget that he would ask Ofgem to remove the fixed daily standing charge from gas in 2027, or as soon as possible afterwards.
A government spokesman responded: "Tackling the affordability crisis is our priority, which is why we're giving families immediate breathing space. From January, millions of households will receive £100 towards their energy costs from January, alongside action to make bills fairer, including removing standing charges from gas bills and supporting those in energy debt."
