Government shelves plan for ‘social tariff’ on energy bills to help vulnerable

Plans to launch a social energy tariff for vulnerable households struggling to pay bills have been quietly shelved by the Government, i understands.

The promise to consider a lower energy tariff for certain consumers were first made in 2022 and reiterated by Rishi Sunak last year.

But sources have indicated it is no longer a priority – with ministers looking at other ways to help those in need.

A Government spokesperson said it was supporting vulnerable households through additional payments and would keep “all options under review”.

Ministers previously said the Department for Energy and Net Zero would launch a public consultation in the summer of 2023 – but it has not been forthcoming.

This is despite calls from organisations – representing disabled people, poorer households and the energy industry itself – for ministers to consider some form of social tariff.

When pressed on the issue of a social tariff in the Commons on Wednesday, Mr Sunak did not reiterate a previous commitment to the consultation.

The development has sparked concern from campaigners who urged the Government not to break its pledge and suggested it had underestimated the scale of energy debt among households.

Daniel Portis, the deputy director of Energy UK, which represents providers, told i the group is “concerned” ministers are “underestimating the scale of the issue” regarding the number of households unable to pay energy bills.

Ofgem revealed last year that debt levels for energy customers are estimated to have risen to nearly £3bn. But, Mr Portis said, “industry experts suggest that debt is significantly higher than Ofgem’s headline statistics”.

He pointed to research by industry consultancy firm BFY Group which suggests debt could be more than three times higher than predicted.

“Where customers use energy but don’t pay their bills, the cost of that energy still needs to be met – either this can be spread across paying customers which is regressive, disproportionately impacting lower-income households, or across taxpayers which is progressive and avoids further bill increases for households that are just about managing,” Mr Portis argued.

Charities representing sick or disabled people, such as Scope, have long argued that a social tariff would be responsible to protect homes where people may be “energy intensive”.

This could apply to those with conditions that require extra warmth or if they are running machinery to support them with their day-to-day needs.

Louise Rubin, head of policy and campaigns at Scope, told i that not going ahead with the consultation “would be a slap in the face for disabled people who face astronomical bills because they have no choice but to use more energy”.

She said that in the year since the promise was made, “almost a third of disabled people have been pushed into debt” and said the “crisis has not gone away”.

The charity has previously called for an energy social tariff discount to bills of 50 per cent for disabled people, carers and those on low incomes to sit alongside existing support.

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“We’re hearing from disabled people who can’t afford to eat, are using candles instead of switching lights on, and rationing how much they use equipment like powered wheelchairs,” she explained.

“Thousands of disabled people, charities and campaigners have been calling for this since the start of this crisis, because we know it’ll make an enormous difference to disabled people’s lives. The Government needs to keep its promise.”

Mr Portis, of Energy UK, also made the argument that a social tariff would make lower income households more desirable customers for firms to take on, preventing them from being excluded from the market.

“Support for struggling households is essential for ensuring that everyone is able to participate in the market and that suppliers can design products and services to meet their needs,” he said.

“This is especially important as we think ahead to net zero and ensuring no-one is left behind.”

In January 2023 Mr Sunak told the Commons the Government was “consulting on the best thing to do going forward, including options… such as a social tariff, as part of our wider reforms of the retail energy market”.

Later that year, in April, then energy secretary Grant Shapps told MPs: “We do think that things like a social tariff could be very helpful, and the Chancellor has undertaken to look at that as well.”

The Government has been forced to spend billions helping households with soaring energy bills as the conflict in Ukraine pushed up gas prices.

From October 2022 to March 2023, the Government capped bills at an average of £2,500 per year and offered households £67 per month towards the cost of their energy.

Low income households have also been offered Government support payments up to the value of £900 – but these are due to come to an end in April and ministers have not yet set out plans to continue financial support.

A Department for Energy Security and Net Zero spokesperson said: “We recognise the cost of living challenges families are facing, which is why we are spending £104bn supporting households with bills.

“Energy prices are falling, and our energy price guarantee remains in place to protect people until April next year. We’re also continuing to support the most vulnerable, with three million households expected to benefit from the £150 warm home discount and eight million households expected to receive a £900 cost of living payment.

“We continue to keep all options under review for those most in need.”