Energy bill help would be based on household income, Reeves says

Government support with energy bills pushed up by the Iran war would be based on household income, the chancellor has told the BBC, as she hinted help might not come until the autumn.

Wholesale oil and gas prices have soared over the past month, with supply from the Middle East severely disrupted. While home energy bills are set to fall between April and June under Ofgem's price cap, there is likely to be a big jump after that.

Rachel Reeves said it was "too early" to say exactly who would get help, adding that demand for energy is low in summer but starts rising in autumn.

But she refused to promise any immediate support for drivers, emphasising the need to keep the public finances under control.

Last week, Reeves confirmed that any help with gas and electricity bills would be targeted at "those who need it most", rather than the universal support that was rolled out by Liz Truss's government in 2022.

In a new interview with BBC Breakfast, she said: "I want to learn the lessons of the past because when Russia invaded Ukraine, the richest, the best-off third of households got more than a third of the support. That makes no sense at all."

Reeves acknowledged that gas usage would go up in the autumn – when Ofgem's current price cap for households in England, Scotland and Wales expires. The next price cap is yet to be announced but is expected to increase significantly.

"From July to September, gas usage, especially by families and pensioners, is the lowest of any months of the year because it is the summer months," she said.

When asked if support could go beyond people who receive benefits, Reeves said: "We're looking at ways in which we can support people based on their household income."

But the chancellor refused to commit to cutting fuel duty or VAT on petrol, saying she had to be "careful" with promises to lower prices for everyone because it risked pushing up inflation, interest rates and taxes in the future.

She added that the best way to bring prices down for people was for the conflict to come to an end and for the Strait of Hormuz to reopen. The Strait is a key waterway that usually carries a fifth of the world's oil and liquefied natural gas but has been effectively closed since the war began.

"That is why Keir Starmer is absolutely right to not get us dragged into a war that we didn't start because of the impact it has on people here at home," she said.

The Conservatives have called on the government to remove VAT from household energy bills for the next three years to help ease the cost of living.

Reform UK has also promised to scrap VAT and green levies on household energy bills if the party were to win power.

Speaking on BBC Breakfast, Reform UK's Treasury spokesman Robert Jenrick criticised Reeves for "acting like a bystander" and not the chancellor of the exchequer.

He said: "I do really wonder if she really understands how tough people are finding things now. This isn't a debate for the autumn or some future date, it's now that people are suffering."

He added that the forecasts point to energy bills going "straight up again" in the autumn, but that middle income families should also be supported "because it shouldn't always be about people on benefits".

The Liberal Democrats have said they would cut household energy bills by changing how new renewable projects are paid for, in order to break the link between gas prices and energy costs.

The Green Party has said ministers should guarantee bills will not rise in July, when the price cap is updated, with the costs funded by hiking taxes on capital gains, and tightening an existing tax on energy firms' profits.

Plaid Cymru has also called for broader direct support for households when bills rise above the current price cap. It also supports long-term investment in renewables to break the link between electricity and gas prices.

The SNP argues that Holyrood should control energy policy and claims that independence is the best route to lowering Scotland's energy bills.

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