A new report is urging the Labour Party government to implement a system of income-based energy bills, where wealthier households pay more per kilowatt-hour than those on lower incomes. The proposal, put forward by the Foundational Economy Research group (FERL), argues for an 'energy justice' approach to utility pricing.
Progressive Charging for Energy
The report, titled 'Energy Justice: Progressive Charging for Utilities', states: 'Energy justice is about the poor paying less and the rich paying more in a considered scheme where, for example, the charge per kWh is varied upwards according to household income.' The authors argue that this would not only deliver distributive justice for the poor but also between all income groups.
They highlight that regressive charging limits total revenue for infrastructure renewal, as it inhibits bill increases. 'Higher bills are not attractive for regulators nor politicians if they increase an already heavy charge on low-income households,' the report notes. Progressive charging, they argue, could facilitate investment in renewable electricity generation, grid distribution, and gas storage, benefiting future generations.
Current Energy Crisis
The researchers point out that the energy price shock from the Ukraine war persists, with electricity and gas bills in 2025 still 75% higher than before the invasion. They warn of another potential shock later in 2026 due to the Middle East conflict, which could have serious effects even if it ends quickly. Energy affordability problems are being aggravated by higher water bills and rising food prices, with the UK's Food and Drink Federation projecting food price inflation of at least 9% this year.
Transportation costs have also increased with higher petrol and diesel prices. Against this backdrop, the report expects growing concern about energy poverty and the dilemmas faced by low-income households, who must choose between heating and eating. Middle-income households are also affected, as they fall below their expected affordability standards.
Energy Justice Framework
The report argues that the problem should be framed as one of energy justice rather than just energy poverty. 'Under current pricing systems, the problem is not only about how low and middle-income households are burdened by charges but also about how high-income households in the top 30% are not paying their fair share of charges for utilities (energy and water),' the authors state.
They note that the top 10% of households have a disposable income more than 10 times larger than the bottom 10%, yet they spend substantially less than twice as much on energy as the roughly £1,500 spent by the bottom 10%. The report concludes that utility charging systems are regressive and need to be reformed for greater social justice.
