The Prime Minister told the House of Commons on 18 January 2023 that the Government was consulting on options for energy bills, including a social tariff, as part of wider reforms of the retail energy market1. The statement is recorded by the End Fuel Poverty Coalition in its account of the campaign for tariff reform1.
The Prime Minister's words were:
"…we are also consulting on the best thing to do [on energy bills] going forward, including options… such as a social tariff, as part of our wider reforms of the retail energy market."
Other statements in the same account set out the Government's position over the following months. On 11 May 2023 the Government responded to petition 624795 to say it intended to consult on options in summer 2023 and was considering potential options, including discounted tariffs, for a new approach to consumer protection from April 20241. On 25 January 2023 the Minister for Energy told the Commons that the Government had said it would look at a social tariff and at how vulnerable people are looked after, but had to look at it in a considered manner1. On 18 April 2023 the Secretary of State for Energy Security and Net Zero told the Commons that things like a social tariff could be very helpful when the Energy Price Guarantee ends in April 20241. By July 2023 the Government appeared to rule out a social tariff consultation1.
The account also sets out proposals put to Government. The social tariff proposal, attributed to David Southgate, formerly of Age UK, would discount energy bills by 50% for eligible households1. If an overarching price cap is still in operation, such as the Energy Price Guarantee, the discount would be set at 50% below the cap; if markets have returned to normal, it would be 50% below the average tariff rate1. Eligible households would include those on means-tested benefits, disability benefit and Carer's Allowance, and in theory anyone below 60% of median household income1. The proposal states that the tariff must automatically include eligible households, so that they do not need to make a switch, and must be universal across suppliers1. It would include households on fixed tariffs and extend to alternative fuels and payment types such as prepayment meters, and would sit alongside existing protections rather than replace the Warm Home Discount1. It also allows a £500 million ring-fenced flexible support fund, and asks government to finance the tariff directly from Treasury spending to avoid consumer cross-subsidies1. The lowest cost expectation is £5.6bn for 2024-25, assuming a typical bill of £1,000 a year, and the most likely annual cost is put at between £5.6bn and £9.4bn1.
A separate proposal, attributed to Chaitanya Kumar of the New Economics Foundation, is for a Universal Basic Energy allowance delivered through a Rising Block Tariff with two or three bands1. The first band would offer a free basic amount of energy for every UK household, based on average essential consumption calculated at 1,050 units of electricity and 2,700 units of gas, with 50% of those units free for every household1. The second band would be close to current market rates and the top band premium rates for extremely high use1. Three additional allowances would exempt households on means-tested benefits from premium rates and provide an extra free block per child per household and per disabled resident, at a cost of roughly £2.4bn1. The figures are based on 2021 prices1.
The account records later developments. In September 2023 the House of Commons Energy Security and Net Zero Committee came out in favour of a social tariff for specific groups of consumers1. In October 2023 more than 140 organisations wrote to the Government urging it not to abandon plans to consult on tariff reform1. In November 2023 proposals for an Emergency Energy Tariff using the Energy Price Guarantee mechanism were presented to Government1. In January 2024 End Fuel Poverty Coalition members called for a social tariff to be included in the 2024 Spring Budget1. In March 2024 the Chancellor confirmed the end of the Energy Price Guarantee and did not include tariff reform in the Spring Budget1. In April 2024 Ofgem and the Government both launched reviews of the energy bills price cap1. In June 2024 polling was published suggesting that just 11% of the public oppose the idea of a social tariff1.
Why it matters for households
A social tariff would change how a household's bill is set rather than how much energy it uses. Under the proposal described, eligibility would be automatic and would not depend on switching supplier, which matters for homes that have never changed tariff and for those on prepayment meters or alternative fuels1. The proposal states that it would sit alongside the Warm Home Discount rather than replace it1, so the two would need to be read together. The Universal Basic Energy model works differently: it would give every household a free block of units and charge premium rates for very high use, with high-income high-usage consumers cross-subsidising low-income low-usage households1. For a home's energy independence, the practical difference is whether support arrives as a discount on a unit rate, as a free allowance of units, or as a payment outside the tariff. The Government's own position has moved between statements: it said in May 2023 that it intended to consult in summer 20231, and by July 2023 it appeared to have ruled a consultation out1. No decision on a social tariff has been reported.
What happens next
The account records that Ofgem and the Government launched reviews of the energy bills price cap in April 20241. No outcome of those reviews, and no date for a consultation on a social tariff, has been reported1.
Sources1 cited
- What next for energy bills? - End Fuel Poverty Coalition, endfuelpoverty.org.uk