Up to 30% of households could qualify for social tariff

Up to 30% of households could be eligible for a social tariff if it was put in place, Jonathan Brearley has estimated.

Giving evidence to the House of Commons select committee on energy security and net zero, the Ofgem chief executive was pressed to provide a ballpark figure on the number of Brits that a social tariff would cover.

The regulator doesn’t have an answer yet on how “broad” a social tariff would need to be and how it should be paid for, he said: “The government has to make a series of decisions about how to support families, it is not appropriate for Ofgem to put forward a view on that. It’s a policy decision for them, which they need to make.”

However, speaking in a “purely personal capacity”, Brearley said that eligibility for the tariff could be linked to receiving benefits.

“Looking at easy to attach markers like benefits would be a good way to apply it,” he added.

This would equate to “about 20 to 30%” of households, running into the “single digit millions”, he said.

Brearley’s comments come following pleas for government to step up support for vulnerable customers from a number of energy retailers.

Neil Kenward, Ofgem’s director for strategy, research and net zero, also told the committee that the regulator will be conducting a “fresh review” of the operating cost element of bill-payers’ standing charges.

He said this exercise will ensure the figure earmarked in the price cap for operating costs, which makes up around one half of the standing charge, is “an accurate reflection of what an efficient company needs to charge to recover costs”.

Brearley also signalled that Ofgem will be taking a tougher line on enforcing suppliers’ service standards than last winter when the industry was in the grip of the bills crisis.

Warning that the industry “needs to understand” that Ofgem will use its enforcement powers if service standards are not met, he said: “The difference with last winter is there was all sorts of turmoil in the market, a lot of risks they were managing. They’re not there anymore so they’ve run out excuses.”

Providing vulnerable consumers with additional support this winter and beyond is a core element of Utility Week’s Action on Bills campaign.

The key asks of government are:

• A clear plan for targeted support on energy bills for vulnerable customers to be put out to consultation before the summer recess with a target of putting this into action by April 2024
• A revised Energy Bills Support Scheme to be brought in for next winter while a more targeted approach is being designed
• Defra to support social tariffs in the water sector through a clear funding commitment and a definitive stance on whether there should be a single social tariff