Splitting the bill - How can Government help families with high energy bills?

17th October 2025

This briefing note looks into the drivers of Britain's stubbornly high household energy bills, and how reform of the costs added onto bills offers a route for helping families with the cost of living this winter.

It outlines three principles for change: that efforts should work for the most vulnerable households, provide a tailwind for the net zero transition, and be realistic within the UK's tight fiscal situation.

It finds that the costs of government policies have pushed up electricity bills over the past decade, and argues that shifting some of these costs - those associated with welfare schemes that have been outsourced to energy bills, those due to closed renewable energy programmes, and those associated with unnecessary carbon taxes - from billpayers to taxpayers would allow ministers to deliver a quick win in cutting household costs this winter.

Key findings
Higher wholesale prices account for 71 per cent of the increase in gas bills seen over the past decade, but the cost of government policies is the biggest driver for electricity bills, accounting for 46 per cent of the increase.

A typical household now spends more than £250 per year on social and energy policy costs, and these have led to what is, in effect, a tax and benefit system that is hidden within energy bills.

Removing the costs of social policies and closed energy schemes from electricity bills could save the poorest fifth of households more than £100 per year, net of tax rises needed to fund this additional spending.

The Carbon Price Support has done its job in ending Britain's reliance on generating electricity from coal. The Government should disband it, at a cost to the Exchequer of around £200 million next year.

Read the full report HERE
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