Britain is still living with the aftermath of the energy crisis. While wholesale prices have eased, household energy bills remain more than £700 higher than in 2021, and millions are struggling with affordability during a wider cost of living squeeze. Around 2 million households are in arrears, and as many as 6.1 million households live in fuel poverty across the UK, as estimated by the NEA. The average fuel poverty gap has nearly doubled since 2020 and now stands at over £400 in England. Without reform, the expiry of the Warm Home Discount (WHD) in April 2026 risks leaving a cliff-edge of support for vulnerable customers.

Why change is needed

Analysis by Public First shows that low income is the strongest predictor of energy affordability challenges. Almost three quarters (72%) of households spending more than 10% of their income on energy live below the poverty line, and nearly all households in “deep fuel poverty” also fall into poverty more broadly. But income isn’t the only driver. Disabled households are almost twice as likely to face fuel poverty and pay an extra £86–£97 per year on energy, while older households (65+) and those paying by standard credit face premiums of around £100 annually. These are structural needs: households cannot simply “use less” energy to save money.

Yet current schemes miss many of those most at risk. Even after recent expansion, the WHD still excludes most disabled households and leaves out around 2.5 million fuel-poor homes, including 2.2 million who are low-income, disabled or older. The £150 payment also falls far short of today’s £400+ fuel poverty gap.

A better model for support

Public First tested three options for reform:

• Rising block tariff – offers lower rates on initial energy use but risks raising bills for vulnerable high-use households.

• Unit-rate discount – reduces the cost per unit of energy but is expensive and complex to align with new dynamic tariffs.

• Payment-based discount – delivers fixed or income-linked rebates on bills, proving the most cost-effective and fair.

A £400 fixed payment could reduce fuel poverty by a similar amount to a 30% unit-rate discount, but at £0.5bn less cost each year. A more ambitious income-linked model, starting at £700 for the lowest-income households and tapering off for households earning £30,000, with £100 booster payments for disabled and standard credit customers, would cost £4.1bn but lift over 1 million households out of fuel poverty – including 720,000 disabled households and 360,000 older households.

How to deliver reform

Reform requires building a new data-matching system that reaches beyond the welfare system, integrating HMRC, DWP, NHS and supplier data while safeguarding privacy. This will take 18–24 months, requiring legislative change to the Digital Economy Act 2017 and a trusted public data processor. Supplementary referral routes – through social prescribing, self-referral tools, and industry initiatives – will ensure no household is missed. Our report sets out a clear timeline of necessary actions.

You can read the report here.