The Resolution Foundation is urging the UK government to launch a £2 billion emergency scheme to reduce energy bills for low-income households [1, 2].
The proposal arrives as the UK prepares for the winter of 2026-2027. If implemented, the plan would protect the most vulnerable families from the financial strain of rising heating and electricity costs during the coldest months of the year.
The think tank suggests the emergency plan would cut energy bills by up to £175 for qualifying low-income homes [1, 2]. This targeted relief is designed to prevent fuel poverty, a condition where households cannot afford to keep their homes adequately warm.
Beyond the direct bill cut, the Resolution Foundation is calling for a temporary removal of Value Added Tax (VAT) on electricity [1]. According to the organization, this tax adjustment would provide an additional annual saving of approximately £45 per household [1].
The total cost to the government for the emergency relief scheme is estimated at £2 billion [1]. The proposal emphasizes that such an investment is necessary to ensure that basic energy needs are met across the United Kingdom [1, 2].
While the government has not yet committed to the plan, the Resolution Foundation said that the combination of direct credits and tax relief would provide a critical safety net. The organization said these measures are essential to mitigate the impact of energy price volatility on the poorest citizens [1].
“The Resolution Foundation is urging the UK government to launch a £2 billion emergency scheme.”
This proposal highlights the ongoing tension between UK fiscal policy and the rising cost of living. By suggesting both a targeted credit and a broad tax removal, the Resolution Foundation is pushing for a two-pronged approach to energy poverty that balances immediate cash relief with systemic cost reductions.
