TUC calls for social tariff to cut energy bills for two thirds of households as new Price Cap starts

• With the new energy Price Cap in place from today, the TUC pushes for social tariff to protect and support 18.7 million households and cut up to £559 off bills each year
• Scheme would see most households’ bills cut – and almost all of the rest would continue to have their bills held down by the Price Cap
• New TUC analysis shows average annual bill in May 2026 was up by £437 compared to May 2021
• Union body says scheme should be paid for by an increase in the windfall tax on banks and would lower inflation

With energy bills set to rise sharply as the new Price Cap comes into force, the TUC is today (Wednesday) calling for an energy social tariff to cut energy bills for the majority of households in Britain – 18.7 million – by up to £559.

Average household energy bills will rise by £221 a year from today. Despite an interim peace deal now being in place, the TUC says there will be “lasting shockwaves” for households’ finances from Trump’s reckless warmongering.

And bills are already far higher than just a few years ago. While Trump’s illegal war has seen households hammered by further jumps in energy bills, costs have been stubbornly high since Russia’s illegal invasion of Ukraine. 

New TUC analysis of ONS data on energy bills shows that average annual payments for energy bills have gone up by £437 compared to May 2021 – costing households a total of £2,500 in the time since.

That’s why the union body is calling on the government to step in and deliver a permanent social tariff to incrementally reduce energy bills to all those on low and middle incomes.

The scheme design includes a built-in trigger for support levels to ratchet up during acute energy cost crises – such as the current period – to keep bills manageable. This will protect living standards and our economy from sustained shocks by keeping energy prices down and helping to reduce inflation.

TUC analysis, drawing on Bank of England judgements about the impact of the government’s recent energy bill package, also estimates that the standard social tariff could reduce CPI inflation by around 0.3 percentage points and the emergency tariff by around 0.4 percentage points.

Permanent standard social tariff

Outside of acute energy crises, the TUC’s proposal is for a long-term permanent standard social tariff that protects lower-income households from high market-rate costs, improving the cost of living for half of households.

Under the TUC's proposed standard social tariff, proposed to set a new baseline for bills support outside of crisis periods, based on current prices:

• Lowest income households would save £466 a year: a 25% reduction to their energy bills.

• Below median households would save up to £279 a year: a 15% reduction to their bills.

Emergency ratchet

In times of acute energy crises, such as the current period, households would get an emergency boost as support ratchets up:

• Lowest income households save up to £559 per year: An immediate 30% reduction to total household bills to the 17% of households whose combined annual income (adjusted for household size and composition) falls below the relative poverty line.

• Households below the median save up to £373 a year: A 20% reduction would be made for a further 33% of households whose combined annual income falls between the relative poverty line and median household income.

• Middle and some higher income households save up to £186 a year: A 10% reduction would be given to an additional 15% of households whose combined annual income falls between the median and mean of household income, bringing the total beneficiaries to 65% of households.

This approach would protect two-thirds of households from punishing rises, with the vast majority of remaining households still benefiting from the Price Cap. In our model, extremely large country estates, which can afford to pay more would no-longer be protected to the Price Cap, with the additional revenue used to help support lower income households.

The TUC says if put into place now, the scheme – including the emergency tariff – would cost £3.4-5.9bn per annum.

The union body says that in large part this should be paid for by increasing the bank surcharge tax, which could raise as much as £60bn over the next four years.

TUC polling shows increasing the windfall tax on banks is incredibly popular with voters across the political spectrum.

 TUC General Secretary Paul Nowak said:

“A peace deal in the Middle East is welcome – but there will be ongoing shockwaves for family finances from Trump’s illegal war.

“Today’s change in the Energy Price Cap is a clear example of how Trump's warmongering is hitting British families – from today, households will start to feel the pain of rising bills. And bills were already far higher than they were five years ago. 

“That’s why we are calling for a social tariff which will cut bills for up to two thirds of households – those that need it most – and retain the Price Cap for everyone else, except the extremely wealthy minority with huge estates.

“This common-sense approach would help protect living standards, stop punishing price rises for households and bring down inflation. It should be paid for by an increase in the windfall tax on banks, who have made eyewatering profits."