The trade body for UK energy suppliers is calling for a new Energy UK social discount proposal that would offer up to £450 in targeted support to the most vulnerable households, as record levels of customer debt and a fresh rise in bills pile pressure on the government to act.
Energy UK, which represents energy firms operating in Britain, says the existing £150 Warm Home Discount is no longer adequate. Bills are unaffordable for millions of people, it argues, and what is needed is a support scheme that is better targeted and can respond to changing prices and individual circumstances.
What Energy UK’s social discount proposal would look like
Under Energy UK’s plan, the government would allow energy companies to combine data on customers’ income, health and energy consumption. Armed with that picture, a new discount scheme could offer adjustable support, scaled to need, rather than a fixed one-off payment. The body says the scheme would cost £1.9 billion, nearly double the current Warm Home Discount programme, but could deliver £450 to some households.
Energy UK says the Warm Home Discount currently reaches six million customers. However, a further 2.5 million people also need help because a medical condition or a poorly insulated home means they use more energy than average. The body suggests the new scheme could be funded through a levy on bills, as the Warm Home Discount is now, or shifted partly or entirely onto the taxpayer through government funding.
Dhara Vyas, chief executive of Energy UK, said suppliers were doing all they could but that persistently high bills and record debt levels showed the current system was not providing the right support. ‘A new social discount would result in a system that works better for everyone,’ she said. According to UK Fact Check, Vyas was appointed chief executive of Energy UK in October 2024 and took up the post on 11 November 2024.
Rising bills and record debt driving calls for change
The calls come as Ofgem, the energy regulator, is due to announce the price cap for October on Wednesday. Energy consultancy Cornwall Insight predicts it will rise by 4%, reaching a three-year high. That follows a sharper 13% rise in July. Cornwall Insight points to two main causes: the conflict in the Middle East, and heatwaves across Europe that drove up demand for air conditioning and power generation. The consultancy also said the price rise would outweigh the impact of Prime Minister Andy Burnham’s decision to remove VAT on household electricity bills from October.
The last time the price cap reached a similar level was in July 2023, according to Cornwall Insight, still below the peaks seen following Russia’s invasion of Ukraine. During that earlier spike, the then-Conservative government committed around £40 billion in support for households with energy bills.
Ofgem reported at the end of last winter that customers behind on their energy bills owed suppliers a record £4.7 billion. Wholesale energy prices have risen since then, following the start of the Iran war in February.
Separately, UK Parliament records show that Ofgem consulted in December 2024 on a proposed one-off Energy Debt Relief Scheme that, depending on its final design, could support up to 2.3 million customers and write off between £0.5 billion and £1 billion in energy debt built up during the price crisis. Ofgem also announced and consulted in February 2025 on plans to require every energy supplier to offer tariffs with low or no standing charges, so that customers could choose to pay those costs through their unit rate instead, with the regulator proposing those tariffs would be available from winter 2025–26.
The Energy UK proposal faces practical hurdles. Combining personal data on income, health and energy use raises complex questions, as does the prospect of drawing on more public funding at a time of pressure on government finances.
Adam Scorer, chief executive of National Energy Action, said the approach was exactly what his charity had been calling for. He pointed out that the Warm Home Discount had increased by only £10 over the last decade. ‘We desperately need a new approach,’ he said. ‘There will be a lot of detail to get right, but if government genuinely wants to provide breathing space for people in fuel poverty, it needs to take this challenge on and work with energy companies and charities to design something truly fit for purpose.’
Wednesday’s Ofgem price cap announcement will set the level of bills households face in the first half of the coming winter, and is expected to sharpen the pressure on ministers to respond to Energy UK’s social discount proposal.
