Lib Dems Unveil Essential Energy Guarantee for All UK Households

BBC Business reported Monday that the Liberal Democrats have announced a new energy policy offering every UK household a basic block of energy at a below-market rate.

The plan, branded the Essential Energy Guarantee, would grant each household a standard allowance charged at a discounted rate. Larger families would receive an additional tier of cheap energy on top of the base allowance.

How the Tiered Discount Would Work

Lib Dem deputy leader Daisy Cooper said the scheme was designed to end what she described as a national scandal of unaffordable energy for millions. Average annual savings are projected at £100 per household. The bottom fifth of earners by income would save around £140 per year on average. Households with medical energy needs, such as those running home ventilators or electric wheelchairs, would receive discounts across their entire bill.

Cooper argued that cold and poorly insulated homes cost the NHS roughly £1 billion annually. She framed the policy as one generating longer-term savings for the state.

Funding the Guarantee Through Ofgem

The party proposes directing energy regulator Ofgem to recover an estimated £5 billion in excess profits it believes domestic suppliers will accumulate by 2028. Cooper characterised those profits as windfalls unrelated to capital investment. She described domestic suppliers as operating with monopoly-like power and argued the regulator should compel repayment.

The Lib Dems also want green levies removed from household bills, with costs instead recovered through a targeted windfall tax on banks. Free home insulation and heat pump installations would be offered to lower-income families under the broader package. The party estimates the combined measures could cut average bills by £900 annually by 2035.

What Other Parties Are Proposing

The proposal arrives as the energy price cap is set to rise from 1 July, pushed higher by wholesale market pressures linked to the war in Iran. The government moved green levies off bills in April, saving households roughly £150 a year. Chancellor Rachel Reeves has signalled that further relief will be means-tested rather than universal.

The Conservatives are calling for a three-year VAT suspension on domestic energy. Reform UK has promised to scrap both VAT and green levies outright. The Green Party wants no July price rise and would fund support through higher capital gains taxes and tighter levies on energy firms’ profits.

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