Energy UK urges £2.3bn bills support for benefits recipients

All households receiving means tested benefits should receive a £400 payment in a £2.3 billion package to ward off fuel poverty, Energy UK has urged Jeremy Hunt.

In a last ditch plea to influence the chancellor’s autumn statement, which takes place next week, Energy UK warns that energy bills will remain very difficult for many this winter even though the price cap has fallen from last winter’s soaring levels to around £2,000 now.

The submission says once the support offered through the Energy Price Guarantee and the £400 Energy Bill Support Scheme (EBSS) are taken into account, the typical household was paying £1,700 last winter, which it estimates is 13% below the current price cap.

As a minimum, Energy UK urges the government to provide targeted additional energy support for 5.8 million households on means tested benefits, equivalent in value to the £400 households received through the EBSS last winter.

The government has withdrawn targeted support energy bills support but is providing top-up benefits payments this winter. The mooted package would cover the bulk of the 6 million households that Energy UK estimates are living in fuel poverty.

The estimated cost of the mooted bills support would be around £2.3 billion – “a fraction” of the universal support offered last winter, according to Energy UK.

Support better targeted at the most vulnerable would offer the taxpayer better value for money, it says, which while considerably less overall than last winter’s support package would “mean more to those receiving it”.

This support should be offered alongside a longer-term reform of the retail market that would involve exploring a social tariff.

Energy UK says it is disappointed that meaningful conversations have not materialised on a future social tariff, which the government has previously signalled its intention to look at implementing. The submission adds that a consultation on a form of social tariff must urgently be brought forward.

Energy UK also calls on the government to commit to catching up on the procurement of Contracts for Difference from September’s disappointing Auction Round 5 when there were no offshore wind bids.

It adds that making up for these missed bids has been given added urgency by the introduction of the Electricity Generation Levy (EGL), which has led projects that might have otherwise pursued a subsidy-free route to market being redirected to CfDs.

It also says that introducing investment allowances, like those available through the Energy Profits Levy to oil and gas projects, would cost relatively little because the EGL revenues are going to decline anyway due to expected falls in electricity bills.

And Energy UK calls on the Treasury to align the 20% VAT rate on electricity used at public electric vehicle charge points with the five per cent rate paid by those charging at home.