Ditch price cap for ‘free basic energy’ plan to help poorest, report says
Every household in Britain should have some of their energy bill paid for by the government to help protect the poorest families, according to a report.
Setting out radical plans to tackle the energy crisis, the New Economics Foundation thinktank (NEF) said a system of “free basic energy” could be launched as early as next year to replace the consumer price cap for gas and electricity bills.
Households could have their energy use paid for up to a certain level, helping the least well-off stay warm as Russia’s war in Ukraine drives up wholesale energy prices.
Usage above the limit would then be charged at a higher price than usual to incentivise energy efficiency and lower consumption – helping support net-zero goals.
Industry leaders and thinktanks are floating ideas for the new prime minister to consider as soaring energy prices drive up inflation to the highest level in 40 years.
Households are bracing for a surge in living costs after Ofgem, the energy regulator, confirmed an 80% rise in the price cap from October to £3,549 a year.
Forecasters estimate this figure could rise to more than £6,000 from April 2023 – more than 500% higher than pre-Covid levels – if current wholesale energy prices are sustained.
Setting out plans to help the poorest families with soaring bills and to dampen the effects of a looming recession, the NEF said a three-pronged approach was required, including reforms to benefits and one-off payments for all households.
The leftwing thinktank said a limit of 8,000 kilowatt hours per year free of gas and 2,000 kWh of electricity could be funded by the government.
Based on current estimates for prices in April 2023, this would mean just under £4,600 in free energy per household.
On top of this, the NEF said
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