Energy bills are at an all-time high, and with the next Ofgem price cap rise to around £3,500 set to be announced tomorrow, calls for more support for those struggling to pay are growing.
Families looking ahead into winter are growing increasingly concerned as the price cap is expected to increase from £1,971 to £3,582 in October, before potentially rising up to £4,650 from January and £5,341 from April 2023.
Energy arrears became the most common form of household debt this summer, in a sign of worse things to come for millions of households.
According to the charity, National Energy Action, around eight million households are on the brink of fuel poverty.
Social energy tariffs were phased out in 2011 in favour of the Warm Home Discount, but the public and energy bosses are calling for them to be reintroduced as bills continue soaring
Britons are calling for more support from both energy suppliers and the Government, as well as voicing their dissatisfaction through campaigns such as Don’t Pay UK.
Supplier Octopus Energy has called for more support from the next Prime Minister, saying energy bills must be their number one priority if they want to avoid a ‘winter cataclysm’.
Millions of households are eagerly awaiting their £400 rebate on bills in October, as proposed by former Chancellor, Rishi Sunak last April.
Labour has called for the Government to scrap VAT on energy bills as well, shaving off a further £100 for the typical household.
However, as bills are expected to rise by another £2,500 from October it simply may not be enough to protect the worst off households.
One solution proposed by energy bosses was the reintroduction of a ‘social tariff’ which could see bills cut for millions in need of extra financial support.
What are energy social tariffs?
Social tariffs are cheaper rates that offer struggling households more support towards paying their essential bills.
They were originally developed by suppliers for their most vulnerable customers who are considered ‘fuel poor’.
This usually refers to households who spend more than 10 per cent of their income on their energy bills, though the eligibility criteria sometimes differs from one energy supplier to another.
These energy tariffs tended to be available to the elderly, people in fuel poverty, people on benefits or on a very low income.
They started to be phased out in 2011, and those who qualified were moved on to their suppliers’ cheapest standard tariff instead.
Some customers also qualified for the Warm Home Discount, though not all customers who qualified for social tariffs were eligible.
Social tariffs are still offered by some broadband and phone providers, often cutting the customers’ bill in half.
How likely is it that social tariffs will be brought back?
Energy bosses and charities have been calling for more support from the UK Government to tackle the upcoming rise in energy bills.
Bosses at EDF and Scottish Power both called for the reintroduction of social tariffs following April’s price cap jump – which saw annual average energy bills soar by 54 per cent.
Since then, forecasts have predicted more steep rises, though the Government has not yet agreed on a course of action to help the expected eight millions vulnerable households who are expected to fall into fuel poverty by Christmas.
Seek support: Those struggling to pay their energy bills should speak to their supplier to discuss their options, as they may be eligible for grants this winter
Scottish Power has also recently proposed a £100bn plan to create a tariff deficit fund, which would be repaid through taxation or surcharges on energy bills over a 20 year period to support those most vulnerable through this coming winter.
Director of policy and advocacy at National Energy Action, Peter Smith, said: ‘The immediate action the UK Government needs to take is to upgrade the energy bill support package to get money into people’s pockets ready for winter.
‘Looking into the medium term, the Government needs to work with regulator Ofgem to introduce a social tariff for low-income households, which would take until Spring 2023 to establish. This could be paid for out of general taxation.’
However, Ruth London, the founder member of Fuel Poverty Action (FPA) said this may not be enough to help people in the long run.
She said: ‘A return to the old system of ‘social tariffs’ could provide some relief – combined with the price cap, it would certainly be better than nothing.
‘But it won’t solve the crisis created by totally unpayable energy prices and uninsulated homes, and would not reverse the present perverse market in which people who are poorer and use less energy pay more per unit than wealthy users.
‘To solve that we need swift implementation of Fuel Poverty Action’s proposal for Energy For All – free energy to cover each household’s basic needs funded by higher prices for profligate use, windfall taxes, and an end to the millions spent daily on subsidising fossil fuels.’
She added: ‘Social tariffs use means-testing – an often degrading test based on income, not need, and inevitably will exclude many households who desperately need support, and who may in fact be worse off as a result.
‘Energy For All would be universal, but would still focus support where it is needed.
‘As a long term solution, Energy For All must be accompanied by a mass insulation and retrofitting programme for the UK’s leaky homes.’
What other energy bill support is available?
If you are worried about your energy bills and have already cut down on your consumption, there may still be other ways to reduce your bills and ease some of the pressures heading into winter.
The Warm Home Discount Scheme, which replaced the social tariffs over a decade ago, is a Government initiative that gives low-income households a £150 discount on bills.
It’s a one-off discount from your energy supplier that comes as a reduction in your energy bill between October and April each year. Not all energy suppliers participate in the scheme, and to be eligible you must fall into the criteria set by your provider.
|April 2022: £1,971||October 2022: £3,582||January 2023: £4,266|
|Source: This is Money, based on Cornwall Insight energy price cap forecasts 9/8/2022|
You may automatically receive the Warm Home Discount if you receive certain types of pension credits.
You won’t need to do anything if you qualify, you should automatically be offered the Warm Home Discount Scheme through the Department of Work and Pensions.
Some suppliers offer this discount to a broader group who are deemed to be vulnerable and at risk of experiencing fuel poverty.
This may include low-income households who earn less than £16,190 annually, if you receive Income Support, Jobseeker’s Allowance, or Universal Credit, and particularly low-income households with a children under five years old.
The Winter Fuel Payment is another option for struggling households. The Government scheme was set up to help older people meet their energy bills every year and is worth between £250 and £600 per person each year.
If you were born on or before 25 September 1956, you are likely eligible for the winter fuel payment for 2022/23. To be eligible for the larger payment you need to have been born on or before 25 September 1942.
Ten energy saving tips
The Energy Saving Trust has listed these ten tips, along with how much they could save a typical household could on energy and water costs per year. Read more on the energy saving tips here.
1. Switch appliances off standby: £55
2. Draught-proof gaps: £45
3. Turn off the lights: £20
4. Wash at 30 degrees and reduce use by one run a week: £28
5. Avoid using the tumble dryer: £60
6. Limit showers to four minutes: £70
7. Swap one bath a week for a shower: £12
8. Don’t overfill the kettle and fit a tap aerator: £36
9. Reduce your dishwasher use by one run a week: £14
10. Insulate your hot water cylinder: £35
Source: Energy Saving Trust, based on a typical three-bedroom, gas-heated home in Great Britain, using April 2022 price cap prices
If you are on a low income or receiving benefits such as Job Seekers Allowance or Universal Credit, and temperatures drop below zero degrees for seven consecutive days, you may also be eligible for a Cold Weather Payment.
The £25 payment for each week of cold weather between 1 November and 31 March is automatically applied to eligible households. If you believe you are eligible but have not received a payment you should get in touch with your local Jobcentre.
The Government is also giving every household £400 off their electricity bill, under a scheme called the Energy Bills Support Scheme. You don’t need to do anything to get the money and you won’t have to pay it back.
Households will get the £400 in six instalments starting from October 2022, and will show as a reduction in your energy bills of at least £66 per month.
If you have not done so already, you could also be entitled to get £150 back from the council to help pay your energy bills through their Council Tax Rebate.
You’ll are entitled to the rebate if you pay council tax and your home is in council tax bands A to D. Only one person per household will get the rebate.
If you are still struggling with your bills, it is recommended that you get in touch with your energy supplier to discuss your options. It may be able to offer you a reduction on your bill, or set up a payment plan to spread the cost over a longer time.
You can also reach out to charities such as StepChange if you are concerned about rising debts, or Citizens Advice, who will be able to support you in finding a solution that suits your situation.