News - End Fuel Poverty Coalition

Grid reform is welcome, but must not become a blank cheque

Ofgem and the National Energy System Operator have announced the biggest shake-up of Britain’s grid connections process to date, prioritising “shovel-ready” renewable projects and clearing out speculative or stalled applications.

But with network firms and energy generators having made billions during the energy crisis, much of it flowing to offshore ‘vampire funds’, campaigners are demanding a just transition that puts people before profits, a focus on community energy projects and delivering fairer bills for households.

A spokesperson for the End Fuel Poverty Coalition, commented:
“Reforming the grid connection system a necessary move that will help unlock cheaper, cleaner, homegrown energy and bring us closer to an energy system that ends fuel poverty.

“But faster grid access must be matched by real accountability for how network firms and energy generators spend and profit. These companies have made billions during the energy crisis — with profits flowing to offshore investors and so-called ‘vampire funds’.

“This reform must not become an excuse for blank cheque infrastructure spending that inflates standing charges while delivering poor value for households.

“And it must be a fair process, so it’s not just a case of those projects with a healthy lobbying budget get preferential treatment. Community energy projects, which deliver cheaper power for customers and have local control and accountability built in, must not be excluded or pushed to the bottom of the queue.

“To truly fix Britain’s broken energy system, we need grid reform, fair pricing, investment in energy efficiency and a social tariff to ensure the transition benefits everyone — not just big investors.”

Grid investment is vital, but not at any cost

Ofgem has announced that £28bn will be spent over the next five years on Britain’s gas and electricity networks, but this could rise to £90bn.

Overall, Ofgem estimates that the net increase in bills to cover costs by 2031 will be around £3 per month. But this could be more in the short-term, falling in the longer term. Of the initial money announced, the majority of the funding (£17.8bn) will go towards maintaining Britain’s ageing gas networks.

The End Fuel Poverty Coalition profits tracker estimated that over £50bn of profits have been generated by electricity and gas transmission and distribution firms since 2020.

A spokesperson for the End Fuel Poverty Coalition, commented:

“With the North Sea running out of gas and after years of under investment, upgrades to Britain’s energy grids are vital to ensure a reliable energy supply and to help homes benefit from renewables as they come online.

“But that shouldn’t mean signing a blank cheque for network and transmission companies. These vast sums of essentially public money must come with proper scrutiny and guarantees for consumers.

“These firms have already made billions in profits during the energy crisis, with significant returns flowing to offshore investors and so-called ‘vampire funds’.

“Households can’t keep footing the bill while private equity profits. Every penny added to customers’ bills must be spent delivering clear value for money and actively helping to reduce the cost of energy in the long-term and ensure energy security.”

Budget brings cut to bills but “no one can warm their home with headlines”

The Government’s Autumn Budget will bring a modest reduction in energy bills next spring, but fuel poverty campaigners warn that a real terms cut in wider efficiency funding risks locking millions of people into cold, damp homes for years to come.

End Fuel Poverty Coalition (EFPC) initial analysis suggests the average annual energy bill will fall to around £1,665 from 1 April 2026, down from £1,755 today. That compares with £1,042 in January 2021, before the energy crisis, and £1,568 in July 2024, showing bills remain far above pre-crisis levels.

However, the Chancellor again failed to set out a plan to introduce a social tariff which would provide a discount on bills to those households who most need support with energy costs, including those with disabilities and health needs which rely on energy use. Campaigners have also expressed concern about the cumulative impact of potential tax rises which they fear could outweigh the savings elsewhere for households.

EFPC coordinator Simon Francis said any reduction in bills was welcome, but warned that the Budget falls far short of what is needed to end fuel poverty:

“Any reduction in energy bills will be welcome as households face their fifth winter of the energy costs crisis and the Government is right to be investing in the Warm Homes Plan to help improve the energy efficiency of peoples’ homes.

“But no one can warm their home with Budget headlines, and the Chancellor’s statement also highlights the scale of the challenge.

“Even with the changes announced, we expect that from April 2026, average energy bills will still be hundreds of pounds higher than they were in winter 2020/2021 and £97 higher than at the General Election.

“The millions of households who will still be struggling with the cost of energy need further bold action from the Government in reform of energy pricing, targeting energy bill support at those who need it, delivering on a new fuel poverty strategy and in creating an ambitious Warm Homes Plan to upgrade cold, damp homes.

“And we’d also urge the Chancellor to address a c.25% projected shortfall in total energy efficiency funding in future Budgets after the ECO scheme is scrapped.”

Scrapping ECO “blows a huge hole” in fuel poverty plans

Alongside the modest bill cut, the Budget confirmed that the Energy Company Obligation (ECO) – the UK’s only national fuel poverty scheme outside the social housing sector – will end next April, with no full replacement programme yet announced.

And although the Chancellor increased the Warm Homes Plan budget to almost £15bn to partially compensate for this, fuel poverty charity National Energy Action (NEA) warned this leaves the UK without a credible plan to end fuel poverty.

Chief Executive Adam Scorer said the Budget “has blown a huge hole” in government strategy:

“Despite the welcome news that the two-child benefit cap is being scrapped and £150 lifted from energy bills, the Budget has blown a huge hole in the government’s strategy to tackle fuel poverty.

“By scrapping the ECO scheme with no successor and no Warm Homes Plan yet in sight, the Treasury has removed the only national scheme focused on fuel poor homes, outside of the social housing sector… Without large-scale retrofit of our leaky homes, there is simply no route to ending fuel poverty in the long term.”

Environmental think tank E3G also warned that ending ECO will hurt both families and jobs. Senior Researcher James Dyson said that:

“It will also cost 10,000 jobs and prevent 1 million families from insulating their homes in the next 4 years. The Chancellor must reverse this cut and reform the scheme to maximise energy savings for the fuel poor.”

Fuel Poverty Action’s Jonathan Bean also highlighted that work to repair botched retrofit still left households in need of help:

“The small reduction in electricity pricing still leaves it four times more expensive than gas. This makes electric heating unaffordable, and risks the health and lives of over a million vulnerable people.

“Instead of announcing emergency funds to fix homes damaged by botched retrofit work, the Government has cut budgets. Victims are being left suffering in dangerously cold, damp and mouldy homes this winter.”

Groundwork, a national charity supporting those suffering the worst effects of fuel poverty through their network of ‘Green Doctor’ energy advisers, warned the need for targeted support for those who need it most remains, regardless of the promise of lower fuel bills.

Groundwork national Chief Executive Graham Duxbury said: “Despite the welcome news of cuts to fuel bills announced by the Chancellor, there will still be an urgent need to ensure those who live in the coldest, dampest homes, or who already have significant levels of energy debt, get the targeted help and support they so desperately need. Now that the Chancellor has scrapped the ECO scheme, it is all the more important that the new Warm Homes Plan prioritises support to vulnerable customers.”

Fair By Design, which campaigns to end the “poverty premium” in essential services, used a reaction thread on X to highlight that the Budget does little to fix structural unfairness in energy pricing, and reiterated its calls for targeted bill support and fairer standing charges for those on low incomes.

Older people: “Budget should have been time to address pensioner poverty”

Older people’s organisations said the Budget was a missed opportunity to tackle pensioner poverty and the specific risks older people face from high energy costs.

Caroline Abrahams, Charity Director at Age UK, warned that the freeze on income tax personal allowances for a further three years will “drag more older people into paying income tax”, including some on low and modest incomes, at a time when prices for essentials are constantly rising. While she welcomed continuation of the Triple Lock and exploratory moves to simplify tax processes for older people on the State Pension, she said:

“Energy bills are a huge worry for many older people and so any additional help from the Government is very welcome. However, we note that the decision announced today of reducing energy costs by £150 next April will coincide with the planned abandonment of the Energy Company Obligation (ECO) programme, forcing the Warm Homes Plan to stretch its budget much further than intended.

“Looking at the overall impact of all these measures in the round leads us to the view that the Government should be doing more to help with energy costs – which will still be higher than when they entered power in 2024. There was also no more money for the Crisis and Resilience Fund at a time when we’re hearing from lots of desperate older people who will be facing another tough winter.”

Independent Age Chief Executive Joanna Elson CBE said the Government had “missed an opportunity” to address pensioner poverty, which affects almost two million older people:

“While we welcome the continuation of the Triple Lock, this alone does not go far enough in supporting older people on the lowest incomes who are not washing to save on water, seeking out warmth in public places and limiting themselves to just one small meal a day.

“We continue to urge the UK Government to increase the Warm Home Discount, support older private renters by uprating Local Housing Allowance so no one has to make dangerous sacrifices to pay their rent, and boost income through a comprehensive entitlement take-up strategy.

“Our research shows that without decisive government intervention, pensioner poverty could almost double by 2040. Worryingly, nothing in this Budget suggests we are steering away from this alarming trajectory.”

Children’s organisations hail “momentous” decision on Two-Child Limit

One of the most widely welcomed announcements in the Budget was the decision to scrap the Two-Child Limit to benefit payments.

The End Child Poverty Coalition called it “momentous news”:

“This is momentous news for the 350,000 children who will be lifted out of poverty by this change to policy and the 700,000 more who will be in less deep poverty. It is these children for whom life will hopefully feel a little easier, who may be able to dream a little bigger, and feel less different to their peers as a result.”

Moazzam Malik, CEO of Save the Children UK said that it was “the single most powerful step to reduce child poverty in a generation.”:

“Every child deserves a childhood free of poverty. For too long, children have been penalised by this pernicious policy, through no fault of their own. This announcement sends a clear signal that all our children’s lives are valued regardless of the circumstances of their birth and that the UK Government is committed to giving every child the best start in life. This is a moment of hope for hard up families.”

Campaigners stressed, however, that while this change will significantly reduce income poverty for many families, those benefits need to be matched with action to ensure homes are warm, safe and affordable to heat. Malik added: “We look forward to working with the UK Government to build on this announcement and the forthcoming child poverty strategy to tackle issues that hold too many families back.”

Health: budget relief welcomed, but warnings over worsening illness and unmet care needs

Health, disability and social care organisations warned that the Autumn Budget fails to address the deep and growing links between fuel poverty, poor health and rising pressure on frontline services.

Marie Curie said that while additional NHS funding and plans for new Neighbourhood Health Centres were welcome, terminally ill people remain overlooked. Toby North, Head of Public Affairs England at the charity, said:

“People facing terminal illness are overlooked time and time again by politicians and policy makers, leaving too many dying in avoidable pain, poverty and alone.

“We welcome more investment for the NHS, plans for 250 new Neighbourhood Health Centres across England, and a potential £150 average reduction in household energy bills. But more needs to be done specifically to support dying people.

“The UK Government must ensure NHS funding reaches services that support dying people. Palliative and end of life care has to be at the centre of plans for neighbourhood health services, and we urgently need more targeted support to protect terminally ill people from spiralling energy bills and poverty at the end of life.”

Disability Rights UK struck a far sharper tone, warning that political decisions are actively making people more ill. Responding to the Budget, the organisation said the country is now “living in an era of sickness caused by political choices”, driven by low incomes, insecure housing, high energy and food costs, and overstretched health and care services.

The organisation warned that disabled people already make up three-quarters of food bank users, and said the Budget offered nothing meaningful to address the causes of rising ill health. It criticised the continued rationing of schemes such as Access to Work, changes to Motability, and further reforms to disability benefits, arguing these measures place the burden on disabled people rather than addressing systemic barriers in workplaces, transport and public services.

Disability Rights UK said that while the abolition of the two-child benefit cap was long overdue, this alone was “a drop in the ocean” given the wider lack of investment in social care, housing and healthcare, adding that the Budget risks deepening hardship and worsening health outcomes for disabled people.

Concerns were also raised by the Social Workers Union (SWU), which warned that the absence of new funding for social care will intensify existing pressures across the system. SWU General Secretary John McGowan said:

“I welcome a number of poverty-reducing measures in the Autumn Budget, including the removal of the two-child benefit cap, but I am profoundly disappointed by the omission of social care.

“No additional funding for social care means a sector already cut to the bone by austerity will be further stretched and expected to absorb additional costs. Chronic underfunding continues to impact social workers and the people we support, leaving us to shoulder rising pressures.”

McGowan called on the Government to invest in social care urgently and to use the Casey Commission to deliver meaningful reform to adult social care in England, warning that delaying action yet again risks destabilising the entire care system.

Together, organisations said the Budget underlines a growing disconnect between measures aimed at easing short-term costs and the failure to address the health consequences of cold homes, low incomes and inadequate care. They warned that without targeted support for people with serious illness, disabled people and those relying on social care, pressures on the NHS and social services will continue to grow — with avoidable human and economic costs.

Housing sector: Warm Homes Plan must now deliver

The housing sector welcomed emergency action on bills but warned that cutting or repurposing energy efficiency funds could undermine long-term progress.

Gavin Smart, Chief Executive at the Chartered Institute of Housing, said:

“We welcome the Chancellor’s recognition that direct action was needed to reduce bills after years of persistently high costs that have forced many into impossible choices. However, cutting billions of pounds previously allocated to making homes permanently warmer risks weakening the long-term solution to fuel poverty and putting supply chains and jobs at risk.

“We now need the government to publish its Warm Homes Plan, setting out how the £14.7 billion in capital funding will be allocated, confirming future energy efficiency standards in both rented sectors, and taking further steps to make clean heating more affordable.”

Scotland: funding squeeze

In Scotland, the real terms reduction in the funding available for vital energy efficiency measures will be felt most heavily. Energy Action Scotland Chief Executive Frazer Scott used a post on X to underline that the Budget has not shifted the dial on affordable energy and highlighted specific concerns about the end of ECO funding:

“Energy Company Obligation going reduces spending in Scotland by £400-500million to 2030 on energy efficiency improvements. Something like 25,000 homes. No mitigation for this loss.”

The End Fuel Poverty Coalition spokesperson added that they would urge the Chancellor to address this with receipts from the Windfall Tax:

“The Chancellor was right to maintain the Energy Profits Levy and then reform it after the current period ends. Given tax rises elsewhere in the budget, it would have been perverse to have then handed a tax break to companies that have already made extraordinary profits during the crisis. But we now need to see the energy efficiency shortfall in Scotland and Wales addressed.”

Energy Profits Levy retained as households still face high bills

The Chancellor’s decision to keep the Energy Profits Levy has been met with fierce opposition from parts of the energy industry, despite falling revenues from the tax.

A spokesperson for the End Fuel Poverty Coalition commented:

“The Chancellor was right to maintain the Energy Profits Levy and then reform it after the current period ends. Given tax rises elsewhere in the budget, it would have been perverse to have then handed a tax break to companies that are making extraordinary profits during the crisis.

“Given that the North Sea will naturally run out of gas, more drilling won’t make energy cheaper or the country more energy secure. But as the gas industry declines, it is vital that workers and communities affected by the changing energy mix are properly supported.

“Even with the changes announced in the Budget, we still expect that from April 2026, average energy bills will be hundreds of pounds higher than they were in winter 2020/2021.

“And in Scotland, we will see a real terms reduction in the funding available for vital energy efficiency measures with the scrapping of the ECO levy, which we would urge the Chancellor to address with the receipts from the Windfall Tax.

“The millions of households who will still be struggling with the cost of energy need further bold action from Governments in Westminster and Holyrood in reform of energy pricing, targeting energy bill support at those who need it, and in creating an ambitious Warm Homes Plan to upgrade cold, damp homes.”

Energy bills to fall next spring, but cold homes remain a national challenge

Today’s Budget brings a modest but welcome reduction in energy bills. After five turbulent years, any drop in costs offers relief to households who have been stretched to breaking point. Our analysis suggests the average bill will fall to around £1,665 from April 2026 — a step in the right direction and recognition that further action on affordability is needed.

But the job is far from done. Bills will still be significantly higher than before the crisis and the UK now faces a 25% shortfall in energy efficiency funding with the end of the ECO scheme. Without restoring long-term investment in warm homes and reforming the way energy is priced, millions will continue to face unnecessary hardship.

A spokesperson for the End Fuel Poverty Coalition commented:
“Any reduction in energy bills will be welcome as households face their fifth winter of the energy costs crisis and the Government is right to be investing in the Warm Homes Plan to help improve the energy efficiency of peoples’ homes.

“But no one can warm their home with Budget headlines, and the Chancellor’s statement also highlights the scale of the challenge.

“And we’d also urge the Chancellor to address a c.25% projected shortfall in total energy efficiency funding in future budgets after the ECO scheme is scrapped.”

* End Fuel Poverty Coalition estimates based on the current price cap, the Ofgem 1 January price cap announcement, industry analysts forecasts and the Chancellor’s statement / Budget documents. Price cap comparison points:

01/01/2021 — £1,042
01/07/2024 — £1,568
01/10/2025 — £1,755
01/01/2026 — £1,758
01/04/2026 — £1,665

Another Winter, same crisis: Energy bills stay high as profits soar

As the UK braces for another winter of cold weather warnings, the Ofgem price cap for January to March 2026 has been announced.

Average energy bills will come in at £1,758. This is £3 higher than current levels, with bills remaining over £700 above 2020 levels and £190 higher than at the General Election in July 2024.

Meanwhile the energy industry has posted more than £40bn in UK profits in the last two years. With the Budget days away, the Government faces a defining choice.

A spokesperson for the End Fuel Poverty Coalition, commented:
“Energy bills remain stubbornly high as households face a fifth winter of the energy costs crisis. Today’s announcement sees standing charges rise yet again, highlighting the structural challenges in how energy is paid for.

“The addition of a new levy on bills which pays for nuclear power stations is unwelcome and could have been delayed until closer to when these plants actually start to generate electricity.

“Today’s Ofgem announcement keeps the average energy bill at almost £700 above the levels of winter 2020/21 and £190 more than at the 2024 General Election.

“Despite many people living in cold damp homes, the energy industry has posted more than £125 billion in profits in the UK alone in recent years.

“Yet some business lobbyists have called for the Chancellor to end the Windfall Tax. Instead, next week’s Budget is a chance for the Government to finally get serious about ending fuel poverty.

“We need long-term investment in energy efficiency, not short-term thinking. We need action to bring down electricity prices, not excuses. And we need a fair tax regime that puts people before profiteers.

“If the Government truly wants to cut bills and protect the public, it must fully fund the Warm Homes Plan, continue to improve our energy security, introduce a fair social tariff, and reform our broken energy pricing system.”

Energy bills could remain £691 a year higher than 2020

Media reports suggest average household energy bills might drop slightly from 1 January 2026. Experts at Cornwall Insight have said that the Ofgem price cap is expected to dip by 1%, taking an average bill to £1,733 a year.

This figure remains £691 higher than before the energy bills crisis started.

A spokesperson for the End Fuel Poverty Coalition, commented:
“As cold weather warnings are issued across the UK, energy bills remain at crisis levels while energy giants have generated over £125 billion in profits on their UK operations since the energy crisis started.

“Millions of households are already rationing their heating to stay afloat, and with temperatures dropping sharply the risks to people’s health and safety are becoming severe.

“After five winters of sky-high bills, families cannot be expected to cope with this alone. We urgently need reduced electricity bills and targeted financial support for those most at risk, alongside a fully funded national programme of insulation and energy-efficiency upgrades to keep homes warm.”

Ministers urged to clarify energy efficiency support funds

More people will get money off technology that keeps their homes warm in winter and cool in summer after the Government has announced plans to expand the Boiler Upgrade Scheme.

This currently offers grants of £7,500 off the cost of installing an air source or ground source heat pump, now the scheme has been expanded to offer a £2,500 discount off the cost of installing an air-to-air heat pump, which can provide heat in winter and air conditioning in summer.

The grants are available to all households and form part of the government’s £13.2 billion Warm Homes Plan, rather than being funded in addition to this budget as previously expected.

A spokesperson for the End Fuel Poverty Coalition, commented:
“The Government doesn’t seem to know if it is coming or going.

“One week they are briefing the media that energy efficiency budgets may be slashed in the Budget. The next they are talking up heat pumps and calling for households to apply for support.

“Households struggling with the fifth winter of high energy bills need to know what help will be available to them to keep their homes warm in winter and cool in summer.

“The Government’s Warm Homes Plan and fuel poverty strategies need to be published without any further delay so households know where they stand and industry can ensure enough skilled workers are trained.”

UK energy industry profits surge past £125bn since 2020

Energy giants have generated over £125 billion in profits on their UK operations since the energy crisis started according to an analysis of company reports. [1]

Around £40bn has been made in profit in the UK by just 27 energy firms in the last two years, yet there are continued calls from energy industry lobbyists to axe the Windfall Tax in the next Budget.

Researchers working for the End Fuel Poverty Coalition examined the declared profits firms ranging from energy producers (such as Equinor, Shell) through to the firms that control our energy grid (such as National Grid and UK Power Networks) as well as suppliers (such as British Gas) and energy trading firms (e.g. Vitol).

The total profits generated globally by the firms since 2020 stand at over half a trillion pounds, with over four-fifths (£466bn) generated by firms with extensive involvement in the gas industry.

This is despite the fact that the gas sector will no longer be able to meet heating demand using only domestically extracted gas by 2027 and as just 14% of the North Sea reserves are now commercially viable according to official statistics [2].

Further analysis shows that as households face a fifth winter of sky high energy bills, over £50bn of the profits over five years are generated by electricity and gas transmission and distribution firms.

These are the “network costs” consumers pay for maintaining the pipes and wires of the energy system and are usually paid for through standing charges on energy bills. The firms were recently criticised in a report by the House of Commons Energy Security & Net Zero Committee.

A spokesperson for the End Fuel Poverty Coalition, commented:

“Energy firms continue to post multi-billion pound profits while millions of households struggle to afford to heat their homes.

“The figures equate to £878 per household, per year in profit. At the same time, average annual energy bills have soared from £1,042 in 2020 to £1,755 today, after peaking even higher in early 2023. [3]

“Even after the temporary windfall tax, oil and gas giants have benefited from exceptional earnings driven by global price spikes, which stands in stark contrast to record energy debt and record levels of fuel poverty.

“The Chancellor must resist pressure to provide a tax cut to the energy industry in the budget and ensure that the system captures excess industry profits fairly and directs revenues to protect vulnerable households and improve the energy efficiency of the nation’s coldest homes.”

Robert Palmer, Uplift Deputy Director, said:

“It is scandalous that oil and gas companies raked in billions in recent years whilst millions of people in the UK still struggle with sky high energy bills.

“Worse, these huge profits aren’t going to support the UK’s energy workers, who are being laid off as the North Sea declines, they’re going to overseas shareholders.

“It’s clear this status quo of continuing to prop up the profiteering oil and gas industry with evermore generous public handouts can’t continue. Rather than give into lobbying by oil and gas bosses for tax cuts, the Chancellor needs to focus on the UK’s long-term energy future.

“That means investing in the UK’s renewable energy industries and supporting workers into secure, long-term jobs that actually serve the UK’s needs and bring down bills permanently.”

Faiza Shaheen, Executive Director at Tax Justice UK said:

“Energy companies’ billions in excess profits are extracted from the pain of millions struggling with the soaring costs of energy and essentials.

“Capitulating to industry lobbying and axing the windfall tax would be an unacceptable decision by the Chancellor, and a sign this government is on the side of the profiteers rather than the public. She must use the Budget to properly tax energy companies and big polluters, and invest in bringing down energy bills for ordinary people.”

ENDS

[1] The data in this tracker has been collated from publicly available company reports and industry sources, with profits adjusted where possible to reflect UK operations. For multinational businesses, UK profit estimates are based on disclosed proportions of revenue, production, or operating assets attributable to the UK, or on reasonable assumptions using sector benchmarks where disclosure is limited. The figures are indicative, providing a consistent basis to assess trends in UK energy-sector profitability and its relationship to household energy costs. These measures differ from company to company due to reporting processes and regulatory requirements in different jurisdictions. In determining which measure of profitability to use, the research has prioritised the measure preferred in the company’s own accounts. The totals declared here include offsetting any losses made by some of the firms in some years of the period examined. 30 firms were monitored, with 27 making a profit over 5 years. These firms were selected by the researchers to create a cross section of the energy industry and to reflect those most frequently covered in the media.

Full information available at: https://www.endfuelpoverty.org.uk/news/energy-firm-profits-tracker/

Data as at 12 November 2025.

The data was compiled by freelance business journalist David Craik and examined and peer-reviewed by a business analyst with board-level experience within complex multinational businesses.

David’s experience has included writing business and city news and features for national newspapers and magazines such as The Daily Mirror, Sunday Times, Wall Street Journal, Scotsman and Daily Express. Much of his content focuses on company financial results and reports in the energy sector and on personal finance issues including wealth management, property, investing and managing household budgets and bills.

[2] https://www.endfuelpoverty.org.uk/north-sea-gas-unable-to-meet-national-heating-needs-from-2027/

[3] £125.7bn in profits divided by 28.6m UK households (ONS) is £4,394 over the course of the 5 years of the energy bills crisis or £878 a year. Ofgem price cap figures from https://www.endfuelpoverty.org.uk/about-fuel-poverty/ofgem-price-cap/

Chancellor mulls £6bn tax cut for gas firms while slashing warm homes budget

Changes to the windfall tax being considered by Rachel Reeves in this month’s budget could see the oil and gas industry handed a £6 billion tax cut, whilst promised investment in energy efficiency to cut household bills is potentially going to be slashed by the same amount (£6.4bn).

With tax increases for working people also widely expected, any roll-back on funding for warm homes would represent yet another broken manifesto promise from this Chancellor, say campaigners.

According to media briefings reported by The Guardian, the Treasury is considering diverting funding from the £13.2 billion Warm Homes Plan — a programme designed to improve cold, damp homes and permanently lower household energy bills — in order to fund short-term energy bill support.

The proposed move would effectively cut the UK’s energy efficiency budget by 40% over five years by substituting parts of the Warm Homes Plan for existing schemes.

Meanwhile, proposals drafted by the oil and gas lobby group Offshore Energies UK, which are being considered by the Chancellor, suggest that removing the Energy Profits Levy at the end of this year, as the industry is pushing for, would lead to a tax loss of £6 billion to the UK Treasury over the next decade.(1)

The oil and gas industry has been lobbying hard for months to scrap the windfall tax in order to reduce their tax bill, despite the sector posting billions in profit, and companies like Shell reporting negative UK taxes last year.

In response to the proposed tax cut, Robert Palmer, deputy director of Uplift said:

“Oil and gas companies have made billions in recent years while millions of people in the UK have struggled with unaffordable energy bills. Worse, firms have chosen to hand these windfalls to overseas shareholders rather than reinvesting them to support UK jobs. To even be considering scrapping measures to cut household bills while cutting taxes for profiteering oil companies would be deeply unfair.”

Palmer also called out the poor economics of the basin and warned Reeves against propping up an industry that is only profitable because of the UK’s generous tax regime.

“The reality is the North Sea is in rapid decline, with most of the gas already burned – and what’s left is increasingly expensive to extract. New drilling is only viable if we hand out even bigger tax breaks to wealthy energy companies, taking money away from public services. Quite apart from the climate impact, it is economic lunacy to continue to allow drilling that would not be viable without the Treasury’s thumb on the scale.”

Simon Francis, coordinator of the End Fuel Poverty Coalition, commented:

“Giving tax breaks to fossil fuel giants and failing to collect tax from large corporations while cutting support for those in fuel poverty are short-term acts of weakness by the Chancellor.

“We obviously understand the urgent need to cut energy bills, but the Chancellor – who previously brought us the Winter Fuel Payment fiasco – is not thinking things through. Taking action to improve energy efficiency helps to cut bills in the long run, protect health and reduce our dependence on expensive fossil fuels.

“It’s entirely possible to bring down energy bills in a fair way — by improving insulation, reforming electricity pricing, and using public investment to upgrade our grid. Instead, we’re seeing the Government ignore long-term solutions while considering tax cuts to those who need them least.”

The latest data shows that around 12.1 million UK households are struggling with unaffordable energy bills, with 5 million of those in deep fuel poverty — spending over 20% of their income on energy.

Annabel Rice, senior political adviser at Green Alliance, said:

“If the government is serious about lowering people’s bills for good, they must invest in insulating our homes, not raid schemes that have helped families lower their energy costs to make their sums add up in the budget.

“We’ve seen more than five different insulation schemes from the government in recent years in England and they show us one thing: stop-start policies confuse homeowners, make jobs in this industry less viable and create uncertainty for investors. With almost nine million families in fuel poverty as winter approaches, it’s time for a fully funded, long term Warm Homes Plan.”

The Warm Homes Plan had been expected to support a wide range of upgrades including insulation, heat pumps, home energy advice, and local council-led retrofit schemes. It was announced as a cornerstone of the UK’s mission to reduce energy demand, support vulnerable households, and cut carbon emissions.

But experts warn that diverting its funds to cover existing schemes will drastically limit its impact, especially for households living in the worst conditions — and risks undermining the Government’s own statutory targets to end fuel poverty by 2030.

Jonathan Bean, campaigner at Fuel Poverty Action, said:

“The Government should be focussed on getting homes fixed, and replacing the failed Eco4 scheme with a well funded home upgrade program that delivers high quality work and guaranteed bill savings. We need a bigger investment in retrofit skills and quality control, not a budget cut that ends up in the pockets of the oil and gas giants.”