The Liberal Democrats have unveiled a new energy policy aimed at providing all households with a basic allowance of energy at a discounted price. The proposed 'Essential Energy Guarantee' would offer an extra allowance of cheap energy to those with the greatest need, with the party estimating that the poorest 20% of families could save an average of £140 a year.
The policy is designed to address the 'national scandal' of millions of people struggling to afford basic energy needs, according to Lib Dem deputy leader Daisy Cooper. The scheme would provide every household with an 'Essential Energy Allowance', sufficient to cover basic needs, at a discounted price. Additional allowances would be available for families with more children and households with extra needs, such as those requiring electric wheelchairs or home ventilators.
The Liberal Democrats believe that the plan would lead to longer-term savings for the state, citing the £1 billion annual cost to the NHS of dealing with the consequences of people living in cold and draughty houses. The party proposes funding the scheme by ordering the energy regulator Ofgem to 'claw back' an estimated £5 billion in extra profits that energy firms are expected to make by 2028.
The proposal is part of a broader package of measures aimed at reducing energy bills and promoting renewable energy. The Liberal Democrats also want to remove green levies on household energy bills and introduce a targeted windfall tax on banks. They propose 'breaking the link' between electricity and gas prices and investing in more renewable generation, with the goal of saving £900 a year from average bills by 2035.
The energy price cap, which fixes the maximum amount customers on a standard variable tariff can be charged, is set to rise from 1 July due to increased wholesale oil and gas prices. The government has removed green levies from bills, transferring the cost to general taxation, and is considering further help for low-income households. The Conservatives have called for the removal of VAT from household energy bills for the next three years, while Reform UK has promised to scrap VAT and green levies on household energy bills if they were to win power.
The Liberal Democrats' proposal highlights the need for a comprehensive approach to addressing energy poverty and promoting sustainable energy solutions. As the UK continues to grapple with the challenges of climate change and energy security, it is essential to consider the impact of policy decisions on vulnerable households and the broader economy.
