Andy Burnham is poised to become Prime Minister on Monday and is expected to announce a £130 annual reduction in energy bills as one of his first acts. The move is part of broader cost-of-living measures promised during his campaign.
Proposal Details
Thinktank Nesta has drawn up a proposal reportedly under consideration by Burnham and his team. According to the Guardian, the plan would remove certain levies from household bills and shift them to general taxation, cutting the average bill by £130. Currently, bills include contributions to green energy projects; these would be funded through taxes instead.
Electricity prices would decrease, making electric heat pumps cheaper to run than gas boilers. The proposal also aims to reduce or eliminate standing charges—daily fees paid regardless of energy usage. Households currently pay 29p per day for gas supply even if no gas is used.
Debt Relief and Tariff Cuts
Nesta's plan calls for wiping out electricity bill debts at a cost of £2.7 billion, providing relief for two million households. This would further cut bills by £29 per year for those currently repaying debts. Andrew Sissons, director of Nesta's sustainable future project, stated: "By combining a zero-taxpayer-cost reform of the gas standing charge with these targeted tariff cuts, the government can deliver around £130 a year in immediate financial relief for the majority of UK households, while making clean heating the cheapest option on the market."
Impact on Households
Homes using more gas would pay higher bills, while those using less energy or favoring electricity would benefit. Energy bill caps have recently risen by 13%, and although summer heat has delayed the impact, winter heating costs are expected to rise significantly.
