Energy Social Tariffs

Debate between George Howarth and Marion Fellows

Thursday 23rd November 2023 Westminster Hall

[Sir George Howarth (in the Chair)]

Before I call Marion Fellows to move the motion, I remind Members that if they wish to take part in the debate, they must bob.

[Marion Fellows (Motherwell and Wishaw) (SNP)]

I beg to move,

That this House has considered energy social tariffs.

It is a pleasure to serve under your chairmanship, Sir George, in this debate on the introduction of an energy social tariff to support disabled people with the cost of living crisis. I thank the Backbench Business Committee for originally timetabling it and the Chairman of Ways and Means for giving me the opportunity to bring this urgent issue here today.

As we enter the winter months, lots of us are really looking forward to the festive period, but for many the winter months, with their colder weather, are a time of genuine worry, stress and anxiety. That is the case for many vulnerable people, particularly in low-income and disabled households, who once again are greatly concerned about high energy bills over the coming winter. That concern has been relayed to me by constituents and all the disabled organisations I regularly meet, which have been stressing to me for months their members’ real concerns about energy bills. It is a top priority for them.

At the outset, I would like to thank the many organisations that sent me briefings for today’s debate: Sense, Scope, the Cystic Fibrosis Trust, Mencap, Marie Curie, Age UK, and Kidney Care UK, as well as Citizens Advice, National Energy Action, Warm This Winter and Centrica—a record amount of briefings for me. Yesterday’s disappointing autumn statement did nothing to address the concerns of low-income, vulnerable and disabled households about energy bills this winter.

Alongside that, Ofgem’s announcement means that households will start paying higher prices for their energy as they enter 2024. I was reliably informed that the new price cap represents a £94 increase on the current rate, but I have since received an email from National Energy Action saying:

“At first glance, it might look like prices are only increasing slightly, but they are not. That’s because Ofgem has just changed how it calculates ‘typical use’. Just three months ago this was a 2-3 bedroom household using 2,900 kWh of electricity and 12,000 kWh of gas a year. Now it’s based on a household using 2,700 kWh of electricity”—

2,000 kWh fewer—

“and 11,500 kWh of gas. It’s important to note the price cap isn’t a cap on the total bill but on the price per kWh of energy.”

I was originally given a figure for a typical annual bill of £1,928, which is now £2,023 if it is based on the same criteria used previously by Ofgem. This will only add to the worry of millions up and down the country.

During the autumn statement one year ago, this very same Government committed to developing a new approach to consumer protection in energy markets by working with consumer groups and industry to consider the best approach, including options such as social tariffs. That commitment has been repeated multiple times since, including by the Prime Minister and others. In April, the Department for Energy Security and Net Zero reiterated that pledge by promising to consult on an energy social tariff in the summer of 2023. However, despite multiple commitments, a consultation has never materialised, and as we approach the end of November there is a significant risk that no new protections will be in place in April 2024. All the while, the very real anxieties of low-income and disabled households over their ability to heat their homes this winter have risen exponentially.

The great need for an energy social tariff is best demonstrated by the wide and varied support for the implementation of one. Disability groups, debt advice groups, politicians across the political spectrum, consumer groups, local authorities, housing providers, Ofgem and even energy companies are in favour. That exemplifies the united front on this vital issue and makes it even more surprising that the UK Government have failed even to hold the consultation they promised. They have continued to bury their head in the sand, despite the fact that National Energy Action, Energy Action Scotland, Age UK, Scope, Citizens Advice, Money Saving Expert and 150 other organisations, as well as MPs, wrote to the Prime Minister in September to call for a consultation on an energy social tariff, as promised last year.

Sir George, you may ask what an energy social tariff is. It is a system of targeted support, through a reduction in energy bills for vulnerable, low-income and disabled households, in response to incredibly high energy bills. The need for a social tariff cannot be stressed enough, as one in three households will spend more this winter on energy bills than they did last winter, and the figure is closer to half for the poorest households. Citizens Advice research shows that energy bills are 61% higher than 2021 levels. Other research suggests that high energy bills will become the new normal for the rest of the decade, highlighting the desperate need for meaningful long-term support.

The year 2022 was widely seen as the turning point in the cost of living crisis in terms of energy bills. The Government continually said that global factors were responsible for the rise, but even though we are told that the energy market has stabilised, bills remain sky high, and 2023 is projected to be much worse due to the huge levels of energy debt accrued last winter. Ofgem and Citizens Advice research shows that energy debt is at the highest level ever. It is clear that action is needed to address the looming debt crisis. Additionally, Ofgem CEO Jonathan Brearley has said:

“we think there is a case for examining, with urgency, the feasibility of a social tariff”.

Furthermore, in the absence of an energy bill support scheme this winter, bills will be 13% higher than last, and today’s announcement confirms that. Rising costs have a huge impact on disabled and low-income households. Many people have to choose between heating and eating. They live in cold, dark homes, struggling to cook meals. For those with disabilities, the results can be catastrophic for their physical and mental wellbeing. Disabled households have significantly higher energy needs, as mobility and hygiene can require increased consumption of electricity—for example, to run electric wheelchairs or to use washing machines frequently. Additionally, some conditions require the constant charging of essential, life-saving equipment, such as oxygen concentrators or feeding pumps.

Scope’s 2023 disability price tag shows that the average monthly cost for a disabled household is already a staggering £975 extra. However, for some conditions, it could be even more. Last year’s Government support—the additional £150 offered to disabled people—did not come close to covering their additional costs. According to Mencap, half of all low-income disabled households have been in arrears on at least one household bill since winter 2022.

The impact is not just financial. The rationing of energy can have a devastating impact on the health of those with disabilities. Some 31% of those surveyed by Scope said that going without heating would severely impact their health, and 9% said it would put their life at risk. According to Marie Curie, there is also a huge impact on those receiving end-of-life care. Many have to spend their final days in hospital, rather than in their own home. That also puts pressure on the NHS, and the costs are significant. Marie Curie says that an NHS in-patient palliative care bed costs £349 a day. Currently, about 5.5 million bed days are required by people at the end of their life in England alone.

Age UK highlights the concerns of some of my constituents, of whom 8,000 live in fuel poverty, about the lack of Government support:

“I am so very tired of being old and invisible. I am frightened to death!!! I can’t seem to save anything to help us for the winter to come, not even credit on the energy bill which I was counting on to help this winter. I worry daily.”

To show the stark reality of the energy consumption that some conditions require, I was going to discuss the power use of life-saving machines such a nebulisers, extra fridges and all that, but I do not have time to go through them all. They are a huge cost for many disabled families, who worry about being able to run them. If they cannot afford to run them because of the cost of electricity, what does the Minister think will happen? People will end up in hospital, or they will not make it to hospital. Do we expect people to fall deeper into debt to protect their health, or do we simply let their conditions deteriorate? The disabled and most vulnerable need more support, and this Government must listen to them.

An energy social tariff is the best way forward. The organisations I have talked to say that such a tariff has five main principles: it must be additional to the warm home discount and the default tariff price cap; it must be targeted to those most in need and go beyond the benefits system—National Energy Action estimates that approximately two thirds of fuel-poor households are not in receipt of any social security payments; it must be mandated across all suppliers; all eligible consumers should be auto-enrolled using suppliers’ existing data and/or data shared by the Department for Work and Pensions; and the tariff must reduce costs for consumers to pre-crisis levels. It is important that people are able to stop worrying this winter about how they are going to deal with the increased prices, which, as I have explained, are even higher than I first thought.

National Energy Action believes that an energy social tariff should meet several tests. Although prices have dropped significantly, they are still high—the July price cap is 80% more than pre-crisis levels—so an energy social tariff must be sufficiently discounted to make a difference. We also have to consider whether an energy social tariff would capture enough households automatically and whether there would be enough support for eligible households. That is particularly relevant to disabled households that are medically dependent on high-demand medical equipment and need to—must—live in warmer homes. It is also relevant to those who live in a home that is not energy efficient, and the UK has the least energy-efficient homes in western Europe.

Will such a tariff work for the legacy prepayment meters used by some of the most vulnerable households in the country? Last year, 20% of the money earmarked for those households went unused, because of difficulties redeeming vouchers. Automatic enrolment is therefore essential. Will support be available for those in Northern Ireland? There must not be disparities across devolved nations in the roll-out. Will it be funded in a fair way? I am assuming that the Government are going to listen to this plea—not from me, but from all the organisations I have listed.

Let us be realistic: we all know that an energy social tariff will cost money. It is essential that the costs are met in a progressive way. If not, there is a risk that the tariff will create a significant cliff edge, where those who narrowly miss out will be much worse off. It is essential that that is avoided. National Energy Action, Citizens Advice and Centrica all say that an energy social tariff should be funded by general taxation, rather than a levy on everyone’s bills, as happens now. That would ensure the greatest level of fairness. If that cannot be done, low-income households on the fringes of support must be exempted from paying towards the social tariff.

A social tariff is affordable. Recent reports show significant headroom in Government finances, and the Prime Minister and Secretary of State have said that the Government’s new round of oil and gas licensing would raise money to reduce bills. A social tariff would have numerous economic benefits; it would also offset the costs. For example, illnesses brought on by having a cold and damp home cost the NHS between £500 million and £1.4 billion a year.

Energy debt is also dramatically reducing the spending power of households who can no longer spend money in their local communities and high streets. That point was reiterated by people interviewed by Scope. One member said:

“I want a social tariff for energy…What that would mean to my quality of life would be incredible…I’d be able to buy a wheelchair, I’d be able to pay for my medicine, I would be able to go to the cinema and I’d be able to eat without going to a food bank. It would change my life.”

Another Scope member in Scotland has highlighted how not being able to afford to pay energy bills puts additional strain on the NHS:

“The house has to be warm, due to my COPD. If it gets too cold, it can lead to chest infection and respiratory failure. If the house is cold, my arthritis pain increases, and mobility is impaired even more. If I get disconnected, I will most likely be taken into hospital.”

That perfectly demonstrates how an energy social tariff could change the quality of life for everyone.

There is additional money for the Government to pay for this. The warm home discount, energy bills support scheme, and energy bills support scheme alternative funding—all designed to help the most vulnerable households —had a cumulative underspend of £440 million last year. That is alongside an additional £1.1 billion extra that the Government generated in VAT from high energy bills. In Scotland, that totalled £96 million that could be distributed to low-income and vulnerable households. Dame Clare Moriarty, chief executive of CAB, has said:

“Energy affordability is a long-term problem that needs a long-term solution. A social tariff protects millions of people from spending excessive amounts on their bills.”

My question to the Minister is this: what level does this crisis have to reach before the Government will commit to supporting households facing high prices for decades? How many vulnerable constituents need to sit in cold, dark houses this winter? How many more years of anxiety do parents of disabled children have to endure, worrying whether they can afford to charge their child’s lifesaving medical equipment? I know things like that are true: my assistant has talked to parents who worry about them. When will people with disabilities get the support necessary to keep warm and manage their condition through the colder months? How many low-income households have to plunge themselves deeper into debt this winter and endure the mental health consequences?

The Government may feel comfortable breaking promises to the most vulnerable in society as the quality of their lives diminishes, but I will continue to fight their corner, as will many others, including all the organisations I have referred to. When will we finally see a consultation on energy social tariffs? It is now too late to introduce an energy social tariff this winter, because it will take about six months. Can we have progress next year? If we cannot have an energy social tariff, will the Minister commit to reinstating the £400 rebate on energy bills and put additional support in place for people with disabilities? Will she commit to expanding the eligibility criteria for the £300 cost of living payments, so that disabled households in receipt of contribution-based or new-style employment and support allowance are eligible?

I know that, in an independent Scotland, we could assist those in need of support, just as other small, independent countries are helping their citizens—for example, Ireland is giving €450 in support to all households. Will the Government extend the energy price guarantee for disabled households beyond March 2024, until a social tariff is introduced? Finally, will the Minister commit to reversing changes to the eligibility criteria for the warm home discount and expand the scheme to provide short-term help for those in need this winter?