Families in receipt of means-tested benefits such as Universal Credit and Pension Credit could see their energy bills subsidised this winter, under plans being drawn up by the new Labour Prime Minister Andy Burnham's administration. According to the I Paper, the Treasury is preparing a targeted relief package that would focus support on households already claiming Department for Work and Pensions (DWP) benefits, with Universal Credit and Pension Credit claimants the most likely beneficiaries.
Targeted support on the cards
A government source told the I Paper that the infrastructure to deliver such a scheme already exists. “The infrastructure to deliver it [a targeted energy bill support scheme] is there,” the source said. The system has been designed to restrict payments to benefit claimants because the Treasury currently has no practical way of targeting households purely based on income. This means that any support would automatically flow to those already known to the DWP, rather than requiring a new means-testing mechanism.
The move comes as energy prices remain a significant strain on household budgets, particularly for lower-income families. While inflation has eased from its peaks, standing charges and unit rates continue to weigh on bills. The government is said to be considering several options for cost-of-living assistance, with a final decision expected closer to the onset of colder weather.
Former chancellor's hints and fiscal constraints
Former Chancellor Rachel Reeves had previously hinted at energy bill support for households before she was replaced in the role by John Healey. Reeves acknowledged that any package would be limited by the government's borrowing rules and its commitment to keeping inflation and interest rates “as low as possible.”
“Contingency planning is taking place for every eventuality so we can keep costs down for everyone and provide support for those who need it most,” she said at the time. Her successor Healey will now oversee any final decisions on winter support.
Burnham's stance on standing charges
Prime Minister Burnham has indicated that he is open to addressing broader cost-of-living issues, including the controversial standing charges added to energy bills. Speaking to the Sunday Mirror, the Makerfield MP said: “People have raised issues like the standing charges on bills, and they kind of pushed me to go further on that.”
Burnham also stated that his team is looking at cost of living support “across the piece.” He added: “We’ll keep monitoring that situation and make sure we’re doing everything that we can do.” These comments suggest that the government may consider additional measures beyond direct bill payments, potentially including reforms to how standing charges are calculated.
Government's existing measures
A government spokesperson responded to queries about further support by highlighting actions already taken. “We’ve cut VAT on electricity to give families breathing space. This is alongside taking £150 off energy bills for years to come and expanding the Warm Home Discount to around six million households,” the spokesperson said. “The government is focused on working to bring down energy bills for good.”
These measures include a reduction in VAT from 5% to 0% on electricity, a permanent cut worth around £150 per household, and a significant expansion of the Warm Home Discount scheme. The Warm Home Discount expansion alone will extend eligibility to some six million low-income households, providing them with automatic rebates on their energy bills.
The road ahead for the relief package
While details remain unconfirmed, the Treasury is said to be undertaking contingency planning for a range of scenarios. The focus on benefit claimants reflects both the practical constraints of the current administrative system and the political priority to protect the most vulnerable. However, questions remain about whether such targeted support will be sufficient to address the scale of fuel poverty across the country.
Consumer groups have long called for structural reforms to the energy market, including changes to standing charges and social tariffs. The government's stated commitment to reducing bills “for good” suggests that long-term measures are being considered alongside any immediate winter top-up. With winter approaching, households on Universal Credit and Pension Credit are advised to monitor official announcements for confirmation of the support package.
