Ministers are exploring plans to channel extra support to households hardest hit by the energy crisis, exacerbated by the ongoing conflict involving Iran, through local councils in England. A government official confirmed that several options are under discussion within Whitehall to extend assistance while managing costs.
Under one proposal, additional funding could be added to the Crisis and Resilience Fund (CRF), a £1 billion annual council-run scheme in England that starts on Wednesday. The fund is designed to provide preventative support to communities and assist people facing financial emergencies. Councils could identify families struggling with higher energy bills and dispense grants accordingly.
Chancellor Rachel Reeves is reviewing plans to help households with energy bills forecast to hit nearly £2,000 a year from July. However, she has ruled out universal support similar to that offered by Liz Truss’s government in 2022, and is under pressure from financial markets to limit spending. Reeves stated that contingency planning is under way to keep costs down and provide targeted support within fiscal rules.
Torsten Bell, a minister in the Department for Work and Pensions and the Treasury, is coordinating the government’s response. He is concerned that bailouts limited to benefit claimants could attract negative headlines, as lower-paid workers who do not qualify for state support also face hardship. An extension of the CRF would allow such households to apply for grants.
Government borrowing costs have risen globally since the US and Israel attacked Iran, with the interest rate on 10-year debt reaching its highest since the 2008 financial crisis. Brent crude has surged nearly 60% in a month, exceeding gains during the 1990 Gulf war. Consumer research from Which? indicated that half of UK households are making financial adjustments to cover essentials.
Several European governments have taken steps to ease the strain. France plans to expand energy bill support to an additional 700,000 households, while Spain has cut VAT on fuel and Germany limited petrol station price rises. The UK government is considering targeted measures to avoid the broad spending of previous crises.
