Households across Britain should be handed a block of energy at subsidised rates to shield them from soaring bills, a thinktank has said.

The New Economics Foundation (NEF) argues every home should receive a guaranteed amount of power – enough to heat two rooms, provide hot water and run essentials such as a fridge and washing machine – with prices frozen at current levels. It says the plan could be funded by a £4.5bn subsidy, roughly matching the expected windfall tax revenues from North Sea oil and gas producers benefiting from elevated global prices.

Energy markets have been volatile following the Iran conflict, with prices spiking before easing after a ceasefire announced by US president Donald Trump.

However, NEF warns prices remain higher than before the conflict and could continue to fluctuate as supply routes through the Strait of Hormuz stabilise.

Under the proposal, households would get a discounted “first tranche” of energy, with normal market rates applying beyond that level.

The thinktank claims this would cut annual bills by more than £160 on average. That equates to savings of about 17% for lower-income households, compared with around 11% for wealthier families.

NEF said the structure would protect vulnerable households while still encouraging higher earners to cut consumption and invest in efficiency measures such as insulation and electric heat pumps.

Alex Chapman, senior economist at NEF and author of the report, said: “We’ve barely emerged from one inflation crisis and now we’re being plunged into another.

“Despite this week’s ceasefire agreement, the aftershocks of this illegal war will hit us hard. Once again, fossil fuel giants and electricity generators are about to rake in mammoth profits while our energy bills go through the roof.”

He told the Guardian that ministers failed to adequately curb excess profits during the last energy crisis, leaving millions of households burdened with debt from unaffordable bills.

Mr Chapman said: “Let’s not make the same mistake again – this government must protect households’ ability to meet their essential energy needs, and our research suggests they can do so by taxing those who profited the most from this war.”

The proposals come as the energy price cap – set by Ofgem – is expected to rise by 14% in July, potentially adding the equivalent of more than £230 to the annual cost.

The cap was first introduced in 2019 to limit excessive charges but was later adjusted during the 2022 energy crisis following Russia’s invasion of Ukraine.

NEF also called for targeted support for businesses hit by higher oil and gas costs linked to the Iran conflict.