Middle class 'to miss out on help with soaring energy bills' as Chancellor 'set to target support at benefits claimants' - while Budget tax hike fears mount

• See more Daily Mail on Google - save us as a Preferred Source

By JAMES TAPSFIELD, UK POLITICAL EDITOR

Published: 08:32 BST, 25 September 2026 | Updated: 08:32 BST, 25 September 2026

Middle class households look set to miss out on further help with soaring energy bills as the Chancellor mulls 'targeted' action.

Fears are mounting that Middle East chaos could drive the energy price cap up by a quarter in the New Year, adding hundreds of pounds to costs for families.

John Healey is now said to be considering options to ease the impact, but support is only likely to go to the poorest.

That could potentially mean expanding the warm home discount, which gives households on means-tested benefits £150 off bills. 

The Government has trimmed 5 per cent VAT off electricity bills until March, but that has already been more than eaten up by price rises. 

Extending the temporary measure would suck up resources as Mr Healey struggles to balance the books, with concerns he will hike taxes yet again in the fiscal package on October 28.  

'We will step in where we can but we also need to be honest that we are not going to be able to solve this entirely. It is a deeply challenging situation,' a Government source told the Times. 

John Healey is struggling to balance the Government's books, with concerns he will hike taxes yet again in the fiscal package on October 28

Turmoil in the Middle East has been driving energy prices higher again

No10 and the Treasury played down the suggestion as 'speculation'.

The energy cap hike could add to a perfect storm for Brits next year, with diesel prices near record levels and the Bank of England poised to increase interest rates.

Mr Healey is rumoured to be contemplating a 'wealth tax' on capital gains and a more punishing 'mansion tax' as he scrabbles to raise revenue at the Budget. That is despite the tax burden already heading towards an all-time high. 

Slowing growth and soaring inflation are set to deal heavy blows to the Government's finances, with Labour MPs resisting Tory calls for cuts to benefits spending. 

In a sign of the challenge the Chancellor faces, briefings have emerged that he could allow the Government's financial ‘headroom’ to shrink to minimise how much money he needs to find.

Rachel Reeves had justified some of her huge tax rises by arguing it was necessary to have a £24billion margin against her fiscal rules.  

Mr Healey has been warned that he would risk fresh carnage on already-febrile bond markets if he lowers the headroom, pushing up borrowing costs for both the Treasury and homeowners.

Tory shadow chancellor Andrew Griffith said: ‘Just like Rachel Reeves, John Healey is trying to fudge the figures rather than cut out-of-control welfare and wasteful spending.

‘Labour are asking us all to take a chance with Britain’s public finances, risking market chaos and higher mortgage rates in the process.’