The New Economics Foundation (NEF) said every home should receive a guaranteed amount of power
The think tank estimates this would slash annual bills by over £160 on average(Image: Gingagi via Getty Images)
Homes across the UK should receive a block of subsidised energy to protect them from skyrocketing bills, according to a think tank.
The New Economics Foundation (NEF) proposes that every household be allocated a guaranteed amount of electricity and gas – sufficient to heat two rooms, provide hot water and power essentials like fridges and washing machines – with prices capped at today’s levels.
The scheme could be financed through a £4.5bn subsidy, roughly equivalent to anticipated windfall tax receipts from North Sea oil and gas firms profiting from elevated global prices. Energy markets have experienced turbulence following the Iran conflict, with costs surging before settling after a ceasefire brokered by US President Donald Trump.
Yet NEF cautions that prices remain elevated compared to pre-conflict levels and may continue to swing as supply chains through the Strait of Hormuz return to normal. Under the blueprint, households would benefit from a reduced-price “first tranche” of energy, with standard market rates kicking in once that allocation is exceeded.
The think tank estimates this would slash annual bills by over £160 on average. Lower-income families would see savings of approximately 17%, while wealthier households would benefit by around 11%.
NEF stated the framework would safeguard vulnerable families while still incentivising affluent consumers to reduce usage and invest in efficiency improvements such as insulation and electric heat pumps. Alex Chapman, senior economist at NEF and author of the report, said: “We’ve barely emerged from one inflation crisis and now we’re being plunged into another.
“Despite this week’s ceasefire agreement, the aftershocks of this illegal war will hit us hard. Once again, fossil fuel giants and electricity generators are about to rake in mammoth profits while our energy bills go through the roof.”
He told the Guardian that government ministers had fallen short in reining in excessive profits during the previous energy crisis, leaving millions of households struggling under a mountain of debt from unmanageable bills.
Mr Chapman warned: “Let’s not make the same mistake again – this government must protect households’ ability to meet their essential energy needs, and our research suggests they can do so by taxing those who profited the most from this war.”
The proposals arrive as the energy price cap – set by Ofgem – is widely anticipated to climb by 14% in July, potentially slapping the equivalent of more than £230 onto annual bills.
The cap was originally introduced in 2019 to prevent extortionate charges, but was subsequently revised during the 2022 energy crisis in the wake of Russia’s invasion of Ukraine. NEF also urged the Government to provide targeted assistance for businesses struggling with soaring oil and gas costs as a result of the conflict in Iran.
