Chancellor Rachel Reeves will use next month’s Autumn Budget to unveil “targeted action” aimed at easing household bills, with energy costs a key focus.
Options under review include cutting VAT on domestic energy and tweaking regulated levies to help households struggling with inflation.
The Chancellor has previously ruled out rises in income tax, national insurance or VAT, meaning fiscal space for new reliefs remains narrow
However, evidence to MPs this week suggests that any Budget help may be limited by deeper cost pressures in the energy system. At a Commons Energy Security and Net Zero Committee hearing on Wednesday, executives from major suppliers warned that household bills are set to rise even if wholesale gas and power prices fall.
They told MPs that “non-commodity” costs such as grid upgrades, balancing charges and decarbonisation levies are now the biggest drivers of long-term price increases. Rachel Fletcher, a senior executive from Octopus Energy projected average bills could climb by about 20 per cent over the next four years, even if wholesale prices collapse.
In response a UK Government spokesperson said: “We categorically reject this speculation. Wholesale gas costs for households remain 75% higher than they were before Russia invaded Ukraine in 2022, and the main reason energy bills remain high.”
The committee testimony highlights how much of the UK’s energy pricing now stems from fixed infrastructure and policy costs rather than volatile global markets.
Any moves by the Chancellor may offer limited short-term relief, but industry figures caution that structural pressures embedded in the system are likely to keep bills elevated for years to come.