Overview

• Under a Resolution Foundation plan presented to the Treasury, charges now placed on electricity bills would shift into general taxation to reduce costs for poorer households.
• The think tank’s modelling suggests annual gains of about £110 for the lowest‑income families and roughly £40 for middle earners, with the highest‑earning quarter paying around £350 more on average.
• Chancellor Rachel Reeves has signalled “targeted action” on energy costs in the 26 November Budget, with officials assessing distributional and fiscal impacts.
• Energy Secretary Ed Miliband defended green levies and would not rule out scrapping the 5% VAT on energy bills, a move analysts say would save the average household about £86 a year and cost around £2.5bn annually.
• Pressure to act has intensified after Ofgem lifted the price cap to £1,755, while Treasury estimates put the levy shift’s headline cost at about £4.5bn initially, falling to roughly £3.5bn before 2030.