Social tariff ‘not the right solution’ for fuel poor customers

A social tariff is not the right solution to help the most financially vulnerable energy customers, a leading Oxford academic has argued.

The method of targeting energy bills support towards the poorest is favoured by many in the industry and until recently seemed to have the backing of government.

However, Dr Brenda Boardman, a research fellow at the University of Oxford, said she was “not a huge fan” of the approach as she does not believe it sufficiently captures those in most need. She highlighted how using means tested benefits to identify those eligible for a social tariff, a metric that has often been suggested, would not work.

Speaking to Utility Week, she said: “None of us have done well so far on targeting the fuel poor. One of the difficulties with all of this is most things like means tested benefits are based on social characteristics – you’re a pensioner, you’re disabled, you have a child under five – none of which correlate that accurately with your fuel bills and fuel poverty.

“So I’m much more interested in something which starts at the other end of the scale…I want to target low energy consumers rather than social characteristics.”

To further illustrate her point, Boardman pointed out that one third of fuel poor customers do not receive a means tested benefit.

She continued: “I don’t want a system which targets two thirds of the fuel poor. I don’t mind if it’s extra generous and therefore targets the fuel poor plus a few, I don’t mind that because there’s a lot of people suffering with high energy prices at the moment…I don’t want it to be so extra generous that people that are sufficiently well off get it as well…I definitely don’t want it to go to 100% of households.”

Boardman suggested that energy suppliers use their customer usage data to determine which customers would be eligible for extra financial support, which could be paid for by using the leftover funds from the government’s Energy Price Guarantee scheme.

She explained: “I want the money paid direct to the energy bill which you can do through the utilities, they know who is a low energy consumer. Whereas if you do a means tested benefit it goes into people’s bank accounts and it helps them with the cost of living and poverty, which of course is crucial, but it doesn’t actually help them stay warm.”

Industry sources have told Utility Week there is increasing concern that the government will abandon plans for a social energy tariff, with ministers believed to have blocked publication of a consultation on the subject.

There are fears the government will only go as far as expanding the Warm Home Discount despite mounting calls – including through Utility Week‘s Action on Bills campaign – for substantial targeted support.