--- title: "Chancellor to spend over £1bn on energy support in budget" publisher: "Stockmark.IT" author: "Stockmark.IT Website" published: "2026-10-07T07:11:12+00:00" modified: "2026-10-07T07:11:12+00:00" date: 2026-10-07 canonical: "https://stockmark.it/chancellor-plans-major-intervention-to-help-poorer-uk-households-with/" category: "Energy" categories: ["Energy"] image: "https://i0.wp.com/stockmark.it/wp-content/uploads/2026/10/chancellor-to-spend-over-1bn-on-energy-support-in-budget.png?fit=1536%2C1024&quality=80&ssl=1" format: "news" language: "en-GB" --- # Chancellor to spend over £1bn on energy support in budget **Published:** October 7, 2026 **Author:** Stockmark.IT Website **Categories:** Energy **Featured image:** ![Chancellor to spend over £1bn on energy support in budget](https://i0.wp.com/stockmark.it/wp-content/uploads/2026/10/chancellor-to-spend-over-1bn-on-energy-support-in-budget.png?fit=1536%2C1024&quality=80&ssl=1) --- The Chancellor, John Healey, is preparing a significant financial intervention to assist lower-income households with escalating energy costs ahead of the upcoming budget. This move follows growing concern among government ministers regarding forecasts that indicate domestic energy bills could rise by hundreds of pounds in January. The proposed package is expected to cost more than £1bn, with the majority of the funding directed towards expanding the existing discount scheme available to households receiving specific benefits. While final decisions remain subject to confirmation, the intervention is set to form a central component of a budget that government sources describe as low-key but focused on alleviating the cost of living for voters. The decision to increase support comes as the government faces a challenging fiscal environment. The Chancellor is navigating a cash crunch while seeking to fund an additional £4.7bn in defence spending and to rebuild the fiscal buffer, which has been diminished by higher borrowing costs. To offset these expenditures, it is likely that taxes will be raised, with particular attention being paid to potential increases in bank taxation. These measures are intended to balance the need for immediate consumer support with the long-term stability of public finances. Previously, government sources had maintained that the reduction in value added tax on electricity bills, announced by Prime Minister Andy Burnham shortly after assuming office, would be the final support measure for the year. However, this position has shifted in response to new data suggesting that geopolitical tensions, specifically the conflict in Iran, will drive the energy price cap up by as much as £442 in January. This projected increase would effectively negate the financial relief provided by the VAT cut, prompting the Treasury to reconsider its approach to household energy support. The most probable immediate solution involves increasing the warm homes discount, which currently provides a £150 reduction on energy bills for eligible benefit recipients. The Chancellor is understood to be considering a further £100 increase to this allowance. Unlike the existing discount, which is funded by bill-payers, this additional support would be financed by taxpayers. This targeted approach aims to provide direct relief to those most vulnerable to price shocks without imposing broader costs on the general consumer base. In parallel, Energy Secretary Miatta Fahnbulleh has advocated for more sweeping reforms to reduce bills for all consumers. Her proposals include removing all levies from energy bills, which would lower costs by up to £120 for the average household. Under this scheme, the levies that currently fund renewable energy and efficiency schemes would be financed through taxation instead. While this approach would reduce inflation and simplify bills, it would carry a cost of up to £3.2bn and could be difficult to reverse if energy costs fall in the future. The Secretary has argued that the current system requires a fairer distribution of costs between the exchequer and bill-payers to ensure resilience and diversity in energy supply. Beyond the immediate budget measures, officials are exploring more radical structural changes to the energy market. These proposals, which could be implemented after the budget, aim to alter how much energy companies can charge customers rather than simply subsidising bills. One option under consideration is a social tariff, which would require energy firms to charge lower prices per unit to poorer households. However, implementing such a scheme would require extensive data collection from tax authorities, the Treasury, and energy companies, a process that would likely take significantly longer than the current political timeline. An alternative approach, known as a rising block tariff, would vary charges based on consumption levels rather than income. This model, previously proposed by the New Economics Foundation, would offer a lower price for a set amount of essential energy use, with higher rates applying once consumption exceeds that threshold. Experts from various think tanks and policy organisations have urged the government to adopt a combination of targeted support for the vulnerable and broader safety nets for all households. They argue that repeated energy crises have exposed flaws in the privatised system, necessitating fundamental reform to capture the benefits of cheap renewables and ensure affordable energy for all. --- **Original URL:** https://stockmark.it/chancellor-plans-major-intervention-to-help-poorer-uk-households-with/ *Created by [WP Markdown Endpoint](https://wpmarkdownendpoint.com/)*