The Joseph Rowntree Foundation (JRF) published a briefing on 18 November 2025 assessing five ways to reduce energy bills, concluding that a rising block tariff (RBT) delivers support to the majority of households more progressively than the alternatives1. The briefing compares an RBT against expanding the Warm Home Discount, an income-based social tariff, and removing VAT from energy bills1.
Under JRF's central model, an RBT with a discounted first block of energy funded by public subsidy "could reduce energy bills for the median household by £150 a year at a cost of £5 billion"1. The foundation states the cost falls to just over £4 billion if carve-outs for households receiving means-tested and disability benefits are removed1. It also models a variant combining a subsidy with a premium on higher consumption, which it says would reduce the median bill by around £60 a year from £2 billion of funding, or by £180 a year from £6 billion1.
JRF says the electricity threshold in its model represents 77% of typical annual electricity usage, and the gas threshold nearly 50% of annual gas usage1. On distribution, it reports that if the funding needed to remove VAT were instead used for an RBT, the bottom income decile would save £128 against £104 under the VAT cut, while the top decile would save £89 against £1281. It acknowledges that some households lose: 14% of households in decile 1 lose by £205 on average, and between 30% and 40% of households in deciles 5 to 7 lose by around £2001.
The briefing sets out three funding routes: general taxation, which it calls the most progressive; a levy on energy network profits, which it estimates could raise around £1 billion a year; and the billing system itself, through a premium on higher consumption1. It states that UK gas and electricity network operators earned approximately £4 billion in excess profits between 2021 and 20241.
"we found that an RBT produces progressive outcomes while delivering support to the majority of households with relatively low barriers to implementation"
| Element | Electricity | Gas |
|---|---|---|
| Discounted first block | Yes | Yes |
| Threshold (kWh) | 40 | 104 |
| Subsidised unit rate (p/kWh) | 10 | 25 |
| Premium above threshold (p/kWh) | 15 | 5 |
| Median annual saving | £150 | included |
The table reflects JRF's modelled parameters for the subsidy-funded RBT1. The briefing notes that its discussion groups were conducted online by More in Common in August 20251.
Why it matters for households
An RBT changes the shape of a bill rather than only its total: a household pays a lower unit rate for an initial block of energy and a higher rate above it. For homes that use relatively little, that structure lowers the cost of essential consumption, which is the mechanism JRF describes as progressive1. For homes that use more, including larger or electrically heated properties, the same structure raises costs, which is why the briefing reports losing households in every decile it models1. The design interacts directly with how a household's tariffs and household energy independence work in practice, since the first-block rate would sit alongside the standing charge and any fixed or tracker tariff a home has chosen. Because the thresholds are set in kilowatt hours, the effect on any one home depends on its consumption relative to 40 kWh of electricity and 104 kWh of gas, and on whether it falls into the carve-outs JRF proposes1. The briefing does not report how an RBT would be applied to homes on heat pumps or other electric heating, and no decision on introducing one has been reported.
What happens next
The briefing is a research publication and sets out no implementation timetable. JRF frames the paper as a contribution to debate ahead of the Budget, noting that removing VAT had become a much-discussed option pre-Budget1. No government response to the modelling has been reported.