Energy social tariff would reduce fuel poverty by 65%

Age UK research shows that about 3.4 million over 60s reported their home was “too cold for most, or all of the time” during January 2024

New analysis by Age UK has suggested that 2.2 million households would not be living in fuel poverty this winter – a reduction of around 65% – if the government had implemented an energy social tariff (a discounted package for low-income households) to help the most vulnerable energy users in society.

In September 2023, 140 organisations and MPs wrote an open letter to Prime Minister Rishi Sunak calling on the government to consider introducing a social tariff to help with energy bills. The government has repeatedly pledged to consult on plans for a social tariff since it was first promised in the autumn statement last year. 

Currently, around one in eight (12%) households in the UK – the equivalent of 3.4m households – are experiencing fuel poverty this winter. In addition, around two in five (38%) UK households in the lowest fifth of equivalised after-tax household income – the equivalent of 2m households – are experiencing fuel poverty this winter.  Age UK believes that an energy social tariff would have lifted 1.3m of these households out of fuel poverty – a reduction of around 60%.

Caroline Abrahams CBE, Charity Director at Age UK said: “In January 2024 about 3.4 million over 60s reported their home was too cold for most, or all of the time.”  She said this was not acceptable and that a permanent solution in the form of an energy social tariff is needed. “Energy is a basic essential and it’s time we treated it that way and ensure everyone can afford enough of it to stay fit and well, and to live decently.” 

To tackle fuel poverty across the UK, charities Age UK, Scope, Fair by Design, Mencap, MND Association, Sense and Macmillan are calling for a discounted energy social tariff from 2024/25 to protect the UK’s most vulnerable people from fuel poverty. They are also asking for a progressive funding mechanism which ensures those missing out on the social tariff do not have to bear its costs. This would require the tariff to be directly funded through government spending.

“More customers are falling deeper into debt with no real long-term solution in place to help them."

In December, EDF also called on Ofgem and the government to consult on a social tariff as soon as possible. Philippe Commaret, MD of Customers at EDF said: “More customers are falling deeper into debt with no real long-term solution in place to help them. Left unaddressed, the situation will drive up costs for all households, with other customers forced to pick-up the bill.”

A Department for Energy Security and Net Zero spokesperson said: “A social tariff is about protecting vulnerable people and that’s exactly what we are doing by providing significant financial support for those who need it most.

“This includes £900 in cost of living payments, £150 to those on eligible disability benefits, plus a further £150 Warm Home Discount. Our Energy Price Guarantee also remains in place until April 2024.”

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