Londoners miss £100 energy payment due to outdated tax bands

Hundreds of thousands of London residents may not receive a £100 winter energy support payment announced in the recent Budget. The payment, intended to help households with rising energy bills, is being delivered through council tax bands A to D. However, analysis by the Centre for London indicates that this system excludes a significant portion of the capital's population.

Outdated valuations exclude many

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The eligibility criteria for the £100 payment are based on council tax bands that were established using property values from 1991. Centre for London's analysis found that only 69% of London properties fall into these eligible bands, meaning nearly one in three homes will miss out. This contrasts with areas outside London, where over 82% of homes are eligible. The think tank highlighted that property price increases in London over the past three decades mean these old bands are a poor indicator of current household need.

A property classified in Band E in 1991 was valued at over £88,000 at that time. Today, such a property could be owned by a low-income family, a pensioner, or a young renter facing high energy costs and modest incomes, yet they would not qualify for the payment.

Disparities in poverty-stricken areas

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The 2023 Budget adds a £100 rebate for council‑tax bands A‑D, removes the gas standing charge and extends the electricity VAT cut, affecting roughly two million London homes including Barnet.

The reliance on historical property values creates a postcode lottery, where access to support is determined by past valuations rather than present hardship. This is particularly evident when comparing boroughs with similar levels of child poverty. For instance, Barking and Dagenham, an area with high child poverty, is expected to see over 90% of properties qualify. In contrast, areas with comparable poverty levels, such as Camden, Islington, and Tower Hamlets, would only have between 55% and 68% of homes eligible for the payment.

Boroughs where the fewest homes are expected to qualify include Kensington & Chelsea, Westminster, and Richmond-upon-Thames, according to the analysis. The payment, which is expected to cost the Government £2.6 billion, has also faced criticism for being too small and poorly targeted to address soaring energy bills.

Call for a fairer system

Rob Anderson, Research Director at Centre for London, stated that while any extra support is welcome, council tax bands are a flawed method for determining who receives it. He explained that in London, families facing similar financial pressures and worries about rising bills can be treated differently simply because of how their homes were valued over thirty years ago. Anderson advocates for a fairer, more accurate approach, suggesting a progressive, partially devolved proportional property tax based on current property values.

Centre for London has previously called for the Government to replace the current council tax system with a proportional property tax that is based on up-to-date property values. Under such proposals, households would pay a flat percentage of their property's current value.