Turning it On & Off

A New Plan for Household Energy Bills

November 13, 2022

‘Turning it On & Off: A New Plan for Household Energy Bills’, delivers a clear and comprehensive programme for delivering on the Chancellor’s goal of a new approach to energy bills that costs taxpayers significantly less while incentivising energy efficiency and ensuring enough support for those in need.

The previous Prime Minister’s scheme to cap all household energy bills for two years will be cut from April,  the Chancellor has said. Rt Hon Jeremy Hunt MP said the support – which limits a typical household bill to £2,500 – would be reviewed so it cost “significantly less than planned”.

With the Energy Price Guarantee (EPG) set to terminate after March 31st, families across Britain are distressed about the prospect of facing energy bills of over £4,000 per year.  Policy Exchange proposes the Tiered Energy Relief Scheme (TERS), a comprehensive programme that would cover all residential consumers for the outstanding 18-month period originally envisioned for the EPG, from April 2023 to September 2024.

The plan has been endorsed by Laura Sandys, Chair of the Government’s Energy Data and Digital Taskforce and former MP for South Thanet, who has written to Business Secretary Grant Shapps urging him to adopt Policy Exchange’s proposals, describing them as “the strongest, most compelling and actionable proposal to deliver consumer benefits which would be ready for roll out by April.”

By targeting benefits to household consumption levels, the plan offers several major advantages:

  • Concentrates support for lower-income families while reducing benefits for the wealthiest consumers
  • Provides clear signals for energy efficiency and demand reduction
  • Limits the Treasury’s total liabilities by achieving over £23bn of savings compared to maintaining the EPG over 18-months

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Authors

Alex Simakov

Senior Fellow of Energy & Environment (2022 - 2023)

Connor MacDonald

Head of Economics and Social Policy (2022-2023)


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