A social tariff providing a 30% discount on the cost of energy for vulnerable households would lower bills by £450 for those in fuel poverty, minimising the need for large-scale government expenditure as seen last winter, finds a report by UCL, on behalf of the Aldersgate Group.
The new report, The Case for a Social Tariff: Reducing Bills and Emissions, and Delivering for the Fuel Poor outlines a pathway to decarbonise home heating and cooling while ensuring that energy bills are affordable for all. These measures can support households, lower the need for public financial outlay to subsidise energy bills, and release capital for consumers to spend on energy efficiency and decarbonisation measures.
The report calls for the government to work with energy suppliers to offer "Time of Use" tariffs for consumers that want them. This option can provide a valuable system-balancing service and lower bills for those able to effectively shift their power consumption.
Lead author Phil McNally (UCL Bartlett School Environment, Energy & Resources) said: "While energy costs are finally falling, bills this winter will still be 78% higher than the pre-crisis average. The Government should take ambitious steps to deliver affordable change in both the near and long-term, in a way that avoids the huge sums of money spent on temporary solutions. This report presents 6 recommendations to bring down bills, reduce emissions, and protect the fuel poor, ultimately calling for the delivery of a Social Tariff."
The report also calls on government to bring forward its decision on the role of hydrogen in home heating from 2026 to 2024, showing a preference for the electrification of home heating and cooling, using hydrogen only where a viable alternative is not possible.
The global energy crisis has placed increasing pressures on households across the UK, with energy expenditure more than doubling for the typical household last winter. To support fuel poor households during this period, HM Treasury spent £33 billion covering around half of household bills.
While declining international gas prices recently led to a decrease in energy costs, most households will still pay at least double the pre-crisis average up to 2027 and remain vulnerable to any future price rises. The report’s authors say it is vital that Government addresses this issue while delivering on its net zero ambitions, which require an emissions reduction of 68% by 2030 and 78% by 2035 relative to 1990 levels.
Laith Whitwham, Policy Principal at Aldersgate Group, said: "The UK is currently behind on the decarbonisation of home heating. In this report, we put forward a series of recommendations that, if implemented, will reduce emissions, bills, and government expenditure in the face of an energy crisis. We also show how a strong commitment to the electrification of home heating - and, as temperatures increase, cooling - is needed from the government now to create confidence and unlock investment across the energy sector."
In addition, the report calls for the government to move policy costs from electricity bills to general taxation and urgently address issues around standing charges for customers on pre-payment meters - many of whom are unable to reconnect to the energy system until they clear debts accrued from fixed charges that do not relate to their energy consumption.
The research was carried out in partnership with the Aldersgate Group, an alliance of leaders from business, politics and civil society that drives action for a sustainable economy.
- E: m.lucibella [at] ucl.ac.uk
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