Energy social tariff could save vulnerable households up to £1,500 a year – here's how it could work
A social tariff is the best way to stop millions of vulnerable people overpaying for energy, according to a new report from Citizens Advice published today. The consumer charity says eligible households could save up to £1,500 a year on their bills under the proposals. A social tariff is something MoneySavingExpert.com founder, Martin Lewis, has also long argued for.
Citizens Advice, in its role as the official watchdog for energy consumers, is calling on the Government to introduce the social tariff by next year. We've asked the Government to respond and we'll update this story if we hear back.
Dame Clare Moriarty, chief executive of Citizens Advice, said: "High energy costs have left too many people choosing between heating and eating. Uncertainty over future high prices only adds to the stress and worry felt in households across the country."
If you're struggling to pay for energy, see our step-by-step Energy bills help guide.
Martin Lewis, founder of MoneySavingExpert, said: "I've argued for a social tariff for years, and now it could be a crucial building block to help repair our broken consumer energy market. When things return to a more normal situation we must work out what energy market we want.
"There are two main routes – either regulate all pricing or have a competitive switching market. We've long aimed for the latter situation, but it has failed many. That's why we must be blunt and identify who are the legitimate and who are the illegitimate victims of competition.
"If I, as a wealthy, financially educated person chose not to switch, that's my problem. If a struggling low-income 90 year old grandmother with onset dementia doesn't switch – that's all our problem. A social tariff looks to protect those who need it."
How an energy social tariff could work
Citizens Advice says a social tariff could take the form of a cash payment to "fuel poor" households (defined as those spending more than 10% of their income after housing costs on energy). The charity argues this form of social tariff would help the most people, while also being affordable to the Government.
The amount each household gets would vary according to their overall income and energy use. Based on analysis in the full report, more than 12 million households on the lowest incomes would qualify for support, and the average qualifying household would see their energy bill reduced by £381 – with some getting up to £1,500.
To deliver this, the charity says the Government could use a combination of data from HMRC and energy suppliers, so that those who are not getting state benefits could also get the support, even if they don't qualify for existing schemes such as the Warm Home Discount.
What you can do now to tackle high energy bills
There are no regular tariffs meaningfully cheaper than the energy price guarantee, so you can't switch and save right now. Yet there are three areas to focus on...
- Try to cut your energy usage. There are lots of ways to easily reduce what you use. Try our new interactive energy saving tool, where you can click around a virtual house to find out how much things cost to run and how to cut back. Also, see more Energy saving tips, the Energy mythbusters guide for less clear-cut issues, and our Heat the human guide.
- Check you're paying the right amount. You can use our 'Direct debit too high?' calculator to check.
- Have you got all the help you qualify for? First check you've got the £400 help all households are eligible for – important as some on prepay meters haven't claimed theirs. Plus if you can't pay, check our Energy bills help guide.
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