Just weeks before energy bills are due to leap by £221 for millions of households, the Liberal Democrats have promised every home a discounted energy allowance – a plan they say would save the average family £100 a year.
The party’s deputy leader, Daisy Cooper, described the current situation as a “national scandal where millions can't afford the most basic energy they need”. Under the Liberal Democrats’ “Essential Energy Guarantee”, every household would receive an “Essential Energy Allowance” – enough to get by – charged at a discounted price. Families with more children would get an extra allowance, while those on the lowest incomes or with additional needs such as charging an electric wheelchair or a home ventilator would receive a “discount on all their energy”.
“Lib Dems propose energy discounts for all households as bills rise by £221 in July.”
Cooper said the poorest 20% of families would save an average of £140 a year, compared with £100 for the majority of households. The policy would be funded by ordering the energy regulator Ofgem to “claw back” an estimated £5bn in extra profits that energy firms are expected to make by 2028. Cooper argued that energy network firms “operate as total monopolies” and should be forced “to pay back” windfall profits that were not the result of investments.
The Liberal Democrats also want to remove green levies from household bills, impose a targeted windfall tax on banks, “break the link” between electricity and gas prices, and invest in more renewable generation. Together with the new guarantee, the party estimates these measures could save £900 a year from average bills by 2035.
The proposals come as the Ofgem price cap is set to rise on 1 July from £1,641 a year to £1,862 for the typical household – an increase of 13%. The cap, updated every three months, covers the 60% of UK households on standard variable tariffs. Prices have jumped after Iran blocked the Strait of Hormuz, a key shipping route for global oil and gas. Ofgem has warned the cap could go even higher this winter if the Middle East conflict drags on.
Yet despite the looming rise, data from YouGov shows 83% of Brits have not switched energy supplier in the last 12 months. Switching to a fixed deal could save nearly £250 compared with July’s price cap. For example, the cheapest fixed tariff with Fuse Energy currently saves £241 over 13 months; switching to E.ON Next’s 12-month fixed deal saves £142.
“Millions of households are at risk of throwing money away by remaining on expensive variable tariffs when cheaper fixed deals are available,” said Greg Marsh, household finance expert and chief executive of the AI-powered switching tool Nous. “The problem is that most people don't have the time to constantly monitor the market, compare tariffs and manage the switching process. Nous removes that hassle by checking where households are overpaying, finding fair deals and handling the switch on your behalf.”
Cooper said the cost to the NHS alone of dealing with people living in cold and draughty houses was £1bn a year – a burden her party hopes the new energy guarantee would ease.