Jeremy Hunt is facing calls for a “social energy tariff” providing cheaper gas and electricity for low income households to be introduced when government support ends next year.
In an open letter to the chancellor, 95 charities and non-profit organisations have urged the government to move quickly to legislate for a change in energy bills for “those in greatest need to ensure they are able to live in their homes comfortably”.
A social tariff would involve lower-income households receiving significant discounts on their energy bills, funded by taxation or by spreading the subsidy cost across better-off bill payers.
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Through the energy price guarantee scheme, the government provides financial support to limit average household bills to £2,500, rising to £3,000 from April for a year.
The letter, signed by organisations including National Energy Action, Age UK and Scope, calls for that government support to be replaced by a tailored scheme from April 2024.
The organisations want to see energy suppliers introduce a discounted, targeted tariff made available to people on existing schemes including means-tested and disability benefits, and the carer’s allowance, alongside “those still struggling with their bills but missing out on support from the welfare system”.
Social tariffs are commonplace in the telecoms industry and there have been calls for all energy suppliers to offer them.
Some energy companies did offer social tariffs before the introduction in 2019 of Ofgem’s price cap, which set limits on how much all customers could be charged for usage. Suppliers have suggested a social tariff alongside a reformed price cap to address high bills spurred by the rise in wholesale gas prices.
Michael Lewis, the UK boss of the energy supplier E.ON, last month called for a social tariff for low-income households.
Ministers would need to examine the best method of implementing a social tariff, which would require complex data sharing between energy suppliers and government departments and administration by a central organisation – likely a government department or the regulator for Great Britain, Ofgem.
Research by Age UK showed seven in 10 people over 60 support the idea of a social tariff for low-income households.
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National Energy Action said it expects 8.4 million UK households to be in fuel poverty – when a household is unable to afford to heat their home – by next April. It estimated that the energy crisis has pushed more than 6.7 million households into fuel poverty, up from 4.5 million in October 2021.
Caroline Abrahams, the charity director at Age UK, said: “Older people are struggling to get by now, and that’s before another energy price increase comes their way in a few months’ time. Many will simply not be able to cope with further price rises and we’re extremely concerned their health and wellbeing will pay the price.
“There needs to be much more protection for those who have no other means of paying such extortionate energy costs. The government must introduce a social tariff for the energy market while prices are so high, and ensure we never face a crisis like this again.”
Matt Copeland, the head of policy and public affairs at National Energy Action, said: “What is really needed is structural change to the energy market. The government must urgently prioritise work to implement a social tariff as soon as possible.”
The call for a social tariff comes amid widespread concern over low-income, elderly and disabled people being cut off from energy supplies after being forced on to prepayment meters they cannot afford to top up.