The Liberal Democrats have proposed a discounted basic energy allowance for every household as bills are set to rise again from 1 July.
The Liberal Democrats have proposed giving every household a basic amount of energy at a discounted price, arguing the plan would ease pressure on bills as the energy price cap is due to rise from 1 July.
The party says its “Essential Energy Guarantee” would save households an average of £100 a year, while those in the greatest need would receive extra support and save an average of £140. Families with more children would also receive a larger allowance.
Under the plan, every household would get an “Essential Energy Allowance” intended to cover enough power to get by at a lower rate. Households needing more help — including those on the lowest incomes or people with extra energy needs such as charging an electric wheelchair or running a home ventilator — would receive a discount on all their energy.
Lib Dem deputy leader Daisy Cooper said the policy was designed to end the “national scandal where millions can't afford the most basic energy they need”. She said the party believed “every household should be able to afford energy”
The Lib Dems say the scheme would be funded by instructing Ofgem to claw back an estimated £5bn in extra profits they believe energy firms will make by 2028. Cooper said domestic energy suppliers “operate as total monopolies” and argued the regulator should force companies to return windfall profits that she said were not the result of their own investment.
The proposal forms part of a wider Lib Dem energy package that also includes free insulation and heat pumps for low-income families, removing green levies from household energy bills, replacing them with a targeted windfall tax on banks, breaking the link between electricity and gas prices, and investing in more renewable generation. The party says the combined measures, including the new guarantee, could save £900 a year from average bills by 2035.
The policy comes as wholesale oil and gas prices have risen following the war in Iran, contributing to a coming increase in the energy price cap, which sets the maximum amount customers on standard variable tariffs can be charged.
The government has already removed green levies from bills, shifting the cost to general taxation and saying that move saves an average of £150 a year. Chancellor Rachel Reeves said in April that any further help later in the year would be targeted by household income rather than given to everyone.
Other parties have also set out energy-bill proposals. The Conservatives have urged the government to remove VAT from household energy bills for three years, Reform UK has promised to scrap VAT and green levies if it wins power, and the Green Party has called for no price rise in July, funded by higher capital gains taxes and tighter taxes on energy firms’ profits.
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