Industry chiefs back direct bill support

Calls for direct support with energy bills in the form of lump-sum cash payments have been broadly welcomed by energy retail bosses.

Several industry leaders have praised a major new report commissioned by Citizens Advice, which makes the case for a social energy tariff to be introduced no later than April next year.

The report, produced by the Social Market Foundation (SMF) and Public First, recommends the introduction of taxpayer-funded lump sum cash payments to certain households according to their income and energy use, which it describes as a social tariff.

Welcoming the report, which he said “sets out the stark reality of rising energy costs”, Eon UK boss Michael Lewis said it is vital that there is a “clear and comprehensive” understanding of the issues facing consumers and of the past failings of the market.

He added: “The cost of energy has become unaffordable for many and is expected to remain unaffordable for a significant amount of time until wholesale costs fall back to levels last seen in 2021.

“For that reason as a first step we must target support at those who need it most and I strongly support the principle adopted in the SMF report that any support should ‘provide a direct reduction in energy bills rather than general income support’.

“Not only does this reduce bills at source, it can be funded in a fairer way through general taxation, rather than paid for through energy bills which would put an unfair burden on both the poorest in society and the squeezed middle.”

Lewis added that most retailers already have the processes in place to deliver this type of support for next winter, such as via a more targeted Energy Bill Support Scheme (EBSS).

“We should also take heed of the conclusions of this report to help deliver an enduring government-funded social tariff from April 2024 so vulnerable people are properly supported beyond the current crisis,” he added.

Elsewhere Simon Oscroft, co-founder of disruptor brand So Energy, which fed into the report with its proposals, said his company fully supports the introduction of a social tariff.

He added: “It is crucial that any bill support goes to those who need it the most. That is why we propose matching household income data – which HMRC has the ability to collate – with usage data from suppliers to create a reliable metric of fuel poverty.

“But this proposal lives or dies on HMRC being empowered to collate and share this data, and keep it updated. Without this reliable picture of household income, government will never be able to provide targeted and tailored support to low income households.

“It will avoid the need for inefficient catch-all support measures in the future, and would enable much more targeted household support for services like water, broadband and council tax.”

Meanwhile Ovo chief executive Raman Bhatia said: “Households have endured one of the worst economic shocks for a generation – and it’s critical they get the support they need. Our teams have been working on the design of a social tariff since we announced our support for it at the start of this year.

“Our industry, consumer groups and the Money Saving Expert all support an energy social tariff and are standing by, ready to help the government to make it happen. We now have the consensus to fix a key element of our broken energy system. Let’s not waste it.”