Abstract
<jats:p>Less than a month after Britain’s new Prime Minister took office, and despite a day one decision to cut VAT from electricity bills, yet another escalation in the war in Iran means that energy bills have not left the political agenda. As of early August, wholesale gas prices have surged back to around the highest levels since fighting began. But the past four years have exposed a gap in the state’s toolkit: beyond the benefit system, the Government has no way of targeting support for households struggling with energy bills. When prices spiked in 2022, ministers fell back on universal support, at a cost of £44 billion. The new Government should not risk repeating previous mistakes: it should build a targeted scheme now, ready to apply a discount to gas and electricity unit prices if needed in early 2027. It does not make sense to rely on further universal support, where the richer half of the population get more than half the benefit. But targeting is harder than it sounds. Passporting support to means-tested benefit recipients, as the Warm Home Discount does, reaches only around a quarter of British households, and would miss most below-average-income households. Nor is hardship confined to the very poorest: in 2022-23, more than 15 per cent of households in the second income quintile could not afford to keep their home warm.</jats:p>