The Government has announced a £50m support package for low-income and vulnerable households that rely on heating oil, as prices have risen sharply following the conflict in the Middle East.

Kerosene, which is used in heating oil systems, has increased more quickly than petrol and mains gas in recent weeks. Unlike gas and electricity, heating oil is not covered by the energy price cap. That means households who are off the gas grid are more exposed to sudden price changes, often having to pay large upfront amounts to refill their tanks.

How the support will be distributed

The funding will be distributed through local councils from 1 April, using the new Crisis and Resilience Fund (CRF).

The allocation has been split based on regional demand:

• £27m for England
• £17m for Northern Ireland
• £4.6m for Scotland
• £3.8m for Wales

Northern Ireland is expected to be most affected, with up to 60% of homes relying on heating oil.

Why this matters

One of the main challenges with heating oil is how it’s paid for.

Unlike monthly direct debits for gas and electricity, heating oil often requires lump sum payments, which can put pressure on household finances, particularly when prices rise quickly.

Ministers have acknowledged that this creates additional financial strain for vulnerable households trying to maintain heating and hot water.

Wider review of the heating oil market

Alongside the support package, the Government has announced a broader review of the heating oil market.

This includes:

• Looking at introducing sector-wide regulation for the first time
• Improving consumer protections
• Working with suppliers to improve service standards

The Competition and Markets Authority (CMA) is also investigating the market to assess whether pricing is fair.

Further proposals include appointing a formal regulator — potentially Ofgem — and introducing an ombudsman under the proposed Energy Independence Bill.

Final thoughts

For households affected, this support may help in the short term. Longer term, the focus is likely to shift towards how the market is regulated and how exposed off-grid households remain to price volatility.

As with most cost pressures, the key is understanding how rising costs affect your overall finances and planning accordingly.

If you’re reviewing your household or business finances in light of rising costs, I’m always happy to chat.