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A group of cross-party MPs have come out in support of introducing a universal basic energy allowance for households to replace the energy price cap.
It comes as new chancellor Jeremy Hunt confirmed this week that the government’s Energy Price Guarantee is to end in April 2023, much earlier than the two-year period previously suggested.
The Energy Equity Commission Bill, submitted by Labour MP Clive Lewis on Tuesday (18 October), proposes a commission be established to prepare a strategy for the government to help households with energy costs.
It so far has the backing of MPs including Caroline Lucas of the Green Party, as well as serving group leader for Plaid Cymru Liz Saville-Roberts.
One of its chief components requires the commission to make recommendations on replacing the cap with a free basic energy allowance and an associated social energy tariff.
While as yet there are no firm details as to how to provide free universal energy, one solution proposed by the New Economics Foundation (NEF) would see the implementation of a rising block tariff where the first 8,000kWh of gas and the first 2,000kWh of electricity are provided free of charge.
Anything above this would be subject to higher marginal costs.
On average, the NEF said, the poorest 10% of households would receive just under 90% of their energy consumption for free.
A free basic energy allowance is the core component of campaign group Fuel Poverty Action’s Energy For All demand, which would see all households given enough energy to meet basic heating, cooking and lighting needs.
A petition calling for such an allowance has so far garnered more than 600,000 signatures and will be delivered to Downing Street on Wednesday (19 October).
The private members bill submitted by Lewis further calls for NEF’s recommendation to include additional payments to help with energy costs for those on Universal Credit and legacy benefits.
Elsewhere, the bill would require the commission to prepare a retrofitting strategy, including a “street-by-street” retrofit programme led by devolved administrations and local authorities, as well as financial support for energy efficiency.
Further proposals include recommendations on the remit and objectives of Ofgem, as well as on writing off household energy debt.
Commenting on the bill, Lewis said that “access to energy to meet the needs of a decent life is a basic right” and there is an “urgent need for a new social settlement to face the century ahead”.
He added: “Too many households do not have their essential energy needs met. The government’s package fails to correct the inequities in the current energy pricing system, and scale up retrofitting to address the UK’s ageing and leaky housing stock.
“The chancellor’s announcement means people will be pushed over a cliff edge come April 2023. Until then, the government’s plan will continue to benefit the richest the most, and let oil and gas companies off the hook for polluting and profiteering.”
Elsewhere in the sector, industry experts have given their thoughts on how the government can go about better targeting support for those most in need.
Adam Bell, former head of energy strategy at the Department for Business, Energy and Industrial Strategy and current head of policy at management consultancy Stonehaven, believes that a mix of uprated benefits with income-proportionate winter tax rebates for everyone else is the best way forward.
“There will be some people in the margins who lose out, there always is, but it’s the best way of trying to capture as many people as possible and minimise the suffering that would otherwise happen,” Bell told Utility Week.
He further stressed the importance of the government using existing mechanisms to provide the support, rather than devising a whole new system.
He added: “The chancellor has committed to doing this by April next year. That’s six months, that’s no time at all in Whitehall.
“That just gives you very, very little time to produce anything more complicated. You have to use your existing systems, otherwise you won’t have a chance of making this happen.”
Support for customers in the face of rising energy bills will be one of the key discussion points at Utility Week Forum on 8-9 November in London. Find out more here.
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