Westminster Hall debate on Energy Social Tariffs - Nov 23

Marion Fellows (Motherwell and Wishaw) (SNP)

I beg to move,

That this House has considered energy social tariffs.

It is a pleasure to serve under your chairmanship, Sir George, in this debate on the introduction of an energy social tariff to support disabled people with the cost of living crisis. I thank the Backbench Business Committee for originally timetabling it and the Chairman of Ways and Means for giving me the opportunity to bring this urgent issue here today.

As we enter the winter months, lots of us are really looking forward to the festive period, but for many the winter months, with their colder weather, are a time of genuine worry, stress and anxiety. That is the case for many vulnerable people, particularly in low-income and disabled households, who once again are greatly concerned about high energy bills over the coming winter. That concern has been relayed to me by constituents and all the disabled organisations I regularly meet, which have been stressing to me for months their members’ real concerns about energy bills. It is a top priority for them.

At the outset, I would like to thank the many organisations that sent me briefings for today’s debate: Sense, Scope, the Cystic Fibrosis Trust, Mencap, Marie Curie, Age UK, and Kidney Care UK, as well as Citizens Advice, National Energy Action, Warm This Winter and Centrica—a record amount of briefings for me. Yesterday’s disappointing autumn statement did nothing to address the concerns of low-income, vulnerable and disabled households about energy bills this winter.

Alongside that, Ofgem’s announcement means that households will start paying higher prices for their energy as they enter 2024. I was reliably informed that the new price cap represents a £94 increase on the current rate, but I have since received an email from National Energy Action saying:

“At first glance, it might look like prices are only increasing slightly, but they are not. That’s because Ofgem has just changed how it calculates ‘typical use’. Just three months ago this was a 2-3 bedroom household using 2,900 kWh of electricity and 12,000 kWh of gas a year. Now it’s based on a household using 2,700 kWh of electricity”—

2,000 kWh fewer—

“and 11,500 kWh of gas. It’s important to note the price cap isn’t a cap on the total bill but on the price per kWh of energy.”

I was originally given a figure for a typical annual bill of £1,928, which is now £2,023 if it is based on the same criteria used previously by Ofgem. This will only add to the worry of millions up and down the country.

During the autumn statement one year ago, this very same Government committed to developing a new approach to consumer protection in energy markets by working with consumer groups and industry to consider the best approach, including options such as social tariffs. That commitment has been repeated multiple times since, including by the Prime Minister and others. In April, the Department for Energy Security and Net Zero reiterated that pledge by promising to consult on an energy social tariff in the summer of 2023. However, despite multiple commitments, a consultation has never materialised, and as we approach the end of November there is a significant risk that no new protections will be in place in April 2024. All the while, the very real anxieties of low-income and disabled households over their ability to heat their homes this winter have risen exponentially.

The great need for an energy social tariff is best demonstrated by the wide and varied support for the implementation of one. Disability groups, debt advice groups, politicians across the political spectrum, consumer groups, local authorities, housing providers, Ofgem and even energy companies are in favour. That exemplifies the united front on this vital issue and makes it even more surprising that the UK Government have failed even to hold the consultation they promised. They have continued to bury their head in the sand, despite the fact that National Energy Action, Energy Action Scotland, Age UK, Scope, Citizens Advice, Money Saving Expert and 150 other organisations, as well as MPs, wrote to the Prime Minister in September to call for a consultation on an energy social tariff, as promised last year.

Sir George, you may ask what an energy social tariff is. It is a system of targeted support, through a reduction in energy bills for vulnerable, low-income and disabled households, in response to incredibly high energy bills. The need for a social tariff cannot be stressed enough, as one in three households will spend more this winter on energy bills than they did last winter, and the figure is closer to half for the poorest households. Citizens Advice research shows that energy bills are 61% higher than 2021 levels. Other research suggests that high energy bills will become the new normal for the rest of the decade, highlighting the desperate need for meaningful long-term support.

The year 2022 was widely seen as the turning point in the cost of living crisis in terms of energy bills. The Government continually said that global factors were responsible for the rise, but even though we are told that the energy market has stabilised, bills remain sky high, and 2023 is projected to be much worse due to the huge levels of energy debt accrued last winter. Ofgem and Citizens Advice research shows that energy debt is at the highest level ever. It is clear that action is needed to address the looming debt crisis. Additionally, Ofgem CEO Jonathan Brearley has said:

“we think there is a case for examining, with urgency, the feasibility of a social tariff”.

Furthermore, in the absence of an energy bill support scheme this winter, bills will be 13% higher than last, and today’s announcement confirms that. Rising costs have a huge impact on disabled and low-income households. Many people have to choose between heating and eating. They live in cold, dark homes, struggling to cook meals. For those with disabilities, the results can be catastrophic for their physical and mental wellbeing. Disabled households have significantly higher energy needs, as mobility and hygiene can require increased consumption of electricity—for example, to run electric wheelchairs or to use washing machines frequently. Additionally, some conditions require the constant charging of essential, life-saving equipment, such as oxygen concentrators or feeding pumps.

Scope’s 2023 disability price tag shows that the average monthly cost for a disabled household is already a staggering £975 extra. However, for some conditions, it could be even more. Last year’s Government support—the additional £150 offered to disabled people—did not come close to covering their additional costs. According to Mencap, half of all low-income disabled households have been in arrears on at least one household bill since winter 2022.

The impact is not just financial. The rationing of energy can have a devastating impact on the health of those with disabilities. Some 31% of those surveyed by Scope said that going without heating would severely impact their health, and 9% said it would put their life at risk. According to Marie Curie, there is also a huge impact on those receiving end-of-life care. Many have to spend their final days in hospital, rather than in their own home. That also puts pressure on the NHS, and the costs are significant. Marie Curie says that an NHS in-patient palliative care bed costs £349 a day. Currently, about 5.5 million bed days are required by people at the end of their life in England alone.

Age UK highlights the concerns of some of my constituents, of whom 8,000 live in fuel poverty, about the lack of Government support:

“I am so very tired of being old and invisible. I am frightened to death!!! I can’t seem to save anything to help us for the winter to come, not even credit on the energy bill which I was counting on to help this winter. I worry daily.”

To show the stark reality of the energy consumption that some conditions require, I was going to discuss the power use of life-saving machines such a nebulisers, extra fridges and all that, but I do not have time to go through them all. They are a huge cost for many disabled families, who worry about being able to run them. If they cannot afford to run them because of the cost of electricity, what does the Minister think will happen? People will end up in hospital, or they will not make it to hospital. Do we expect people to fall deeper into debt to protect their health, or do we simply let their conditions deteriorate? The disabled and most vulnerable need more support, and this Government must listen to them.

An energy social tariff is the best way forward. The organisations I have talked to say that such a tariff has five main principles: it must be additional to the warm home discount and the default tariff price cap; it must be targeted to those most in need and go beyond the benefits system—National Energy Action estimates that approximately two thirds of fuel-poor households are not in receipt of any social security payments; it must be mandated across all suppliers; all eligible consumers should be auto-enrolled using suppliers’ existing data and/or data shared by the Department for Work and Pensions; and the tariff must reduce costs for consumers to pre-crisis levels. It is important that people are able to stop worrying this winter about how they are going to deal with the increased prices, which, as I have explained, are even higher than I first thought.

National Energy Action believes that an energy social tariff should meet several tests. Although prices have dropped significantly, they are still high—the July price cap is 80% more than pre-crisis levels—so an energy social tariff must be sufficiently discounted to make a difference. We also have to consider whether an energy social tariff would capture enough households automatically and whether there would be enough support for eligible households. That is particularly relevant to disabled households that are medically dependent on high-demand medical equipment and need to—must—live in warmer homes. It is also relevant to those who live in a home that is not energy efficient, and the UK has the least energy-efficient homes in western Europe.

Will such a tariff work for the legacy prepayment meters used by some of the most vulnerable households in the country? Last year, 20% of the money earmarked for those households went unused, because of difficulties redeeming vouchers. Automatic enrolment is therefore essential. Will support be available for those in Northern Ireland? There must not be disparities across devolved nations in the roll-out. Will it be funded in a fair way? I am assuming that the Government are going to listen to this plea—not from me, but from all the organisations I have listed.

Let us be realistic: we all know that an energy social tariff will cost money. It is essential that the costs are met in a progressive way. If not, there is a risk that the tariff will create a significant cliff edge, where those who narrowly miss out will be much worse off. It is essential that that is avoided. National Energy Action, Citizens Advice and Centrica all say that an energy social tariff should be funded by general taxation, rather than a levy on everyone’s bills, as happens now. That would ensure the greatest level of fairness. If that cannot be done, low-income households on the fringes of support must be exempted from paying towards the social tariff.

A social tariff is affordable. Recent reports show significant headroom in Government finances, and the Prime Minister and Secretary of State have said that the Government’s new round of oil and gas licensing would raise money to reduce bills. A social tariff would have numerous economic benefits; it would also offset the costs. For example, illnesses brought on by having a cold and damp home cost the NHS between £500 million and £1.4 billion a year.

Energy debt is also dramatically reducing the spending power of households who can no longer spend money in their local communities and high streets. That point was reiterated by people interviewed by Scope. One member said:

“I want a social tariff for energy…What that would mean to my quality of life would be incredible…I’d be able to buy a wheelchair, I’d be able to pay for my medicine, I would be able to go to the cinema and I’d be able to eat without going to a food bank. It would change my life.”

Another Scope member in Scotland has highlighted how not being able to afford to pay energy bills puts additional strain on the NHS:

“The house has to be warm, due to my COPD. If it gets too cold, it can lead to chest infection and respiratory failure. If the house is cold, my arthritis pain increases, and mobility is impaired even more. If I get disconnected, I will most likely be taken into hospital.”

That perfectly demonstrates how an energy social tariff could change the quality of life for everyone.

There is additional money for the Government to pay for this. The warm home discount, energy bills support scheme, and energy bills support scheme alternative funding—all designed to help the most vulnerable households —had a cumulative underspend of £440 million last year. That is alongside an additional £1.1 billion extra that the Government generated in VAT from high energy bills. In Scotland, that totalled £96 million that could be distributed to low-income and vulnerable households. Dame Clare Moriarty, chief executive of CAB, has said:

“Energy affordability is a long-term problem that needs a long-term solution. A social tariff protects millions of people from spending excessive amounts on their bills.”
My question to the Minister is this: what level does this crisis have to reach before the Government will commit to supporting households facing high prices for decades? How many vulnerable constituents need to sit in cold, dark houses this winter? How many more years of anxiety do parents of disabled children have to endure, worrying whether they can afford to charge their child’s lifesaving medical equipment? I know things like that are true: my assistant has talked to parents who worry about them. When will people with disabilities get the support necessary to keep warm and manage their condition through the colder months? How many low-income households have to plunge themselves deeper into debt this winter and endure the mental health consequences?

The Government may feel comfortable breaking promises to the most vulnerable in society as the quality of their lives diminishes, but I will continue to fight their corner, as will many others, including all the organisations I have referred to. When will we finally see a consultation on energy social tariffs? It is now too late to introduce an energy social tariff this winter, because it will take about six months. Can we have progress next year? If we cannot have an energy social tariff, will the Minister commit to reinstating the £400 rebate on energy bills and put additional support in place for people with disabilities? Will she commit to expanding the eligibility criteria for the £300 cost of living payments, so that disabled households in receipt of contribution-based or new-style employment and support allowance are eligible?

I know that, in an independent Scotland, we could assist those in need of support, just as other small, independent countries are helping their citizens—for example, Ireland is giving €450 in support to all households. Will the Government extend the energy price guarantee for disabled households beyond March 2024, until a social tariff is introduced? Finally, will the Minister commit to reversing changes to the eligibility criteria for the warm home discount and expand the scheme to provide short-term help for those in need this winter?

3.30pm
Peter Aldous (Waveney) (Con)

It is a pleasure to serve with you in the Chair, Sir George. I congratulate the hon. Member for Motherwell and Wishaw (Marion Fellows) on securing this debate and setting out in comprehensive detail the evidence base for an energy social tariff. I also thank the Backbench Business Committee for granting the debate.

Everyone should have access to a warm and secure home. For the majority of people, that will be provided through the marketplace, although our energy market is imperfect and invariably, at all times, in the interest of fairness, there is a need for Government intervention. Before the current cost of living crisis, that intervention was provided predominantly through the energy price cap, which, while not perfect, performed an important role. The energy price cap has been increased today, although from what we have heard from the hon. Lady, and from the feedback that I am receiving, that will be of limited relevance to many of those who are struggling with their bills.

The dramatic increase in energy prices, primarily caused by the Russian invasion of Ukraine, has necessitated a different approach, and to their credit the Government have stepped in with more direct support over the past 18 months to two years. My right hon. Friend the Chancellor of the Exchequer continued with that strategy yesterday in his autumn statement, and I particularly welcome the increase in the local housing allowance. I have also heard that, as the hon. Lady has outlined, there is some concern as to whether he has done enough. I think he has tried, and I hope he has done enough, but in many ways I am on tenterhooks to see whether he actually has.

That said, it is clear that in the medium-to-long term—when I talk about the medium term, realistically I am now talking about 2024-25 onwards—a different approach is required to protect the most vulnerable. The energy price cap on its own has run its course, and it is thus appropriate to consider a social tariff, which can provide longer-term, more targeted support for the most vulnerable households.

The fact that we need such support is clear from the evidence base we heard about from the hon. Lady and from the feedback that we all receive in our constituencies from those who come into our surgeries, often with heartbreaking stories of the challenges they face. Those messages are reinforced by the briefings we all received ahead of this debate—as the hon. Lady said, we have received a great many of them—from such organisations as Citizens Advice, Mencap, Marie Curie, the Royal National Institute of Blind People, the Cystic Fibrosis Trust and Scope. All those organisations have one thing in common: their clients—the people they look after, whom they support and whose needs they articulate to us as Members of Parliament—are the most vulnerable. They are the people who are the most challenged at this time.

It is also important to thank those churches and other faith groups, charities and volunteers, aided by local councils right throughout the country, who have reached out and are supporting those who are struggling with their energy bills. A network of warm rooms has now sprung up across the UK, which shows British society operating at its very best.

From my perspective, as I have said, the case for a social tariff is proven. It is now necessary to move on to the more complicated and difficult challenge: how to design that tariff and then introduce it. We have received a great many representations ahead of this debate; the one I found particularly interesting and relevant was the report of the Social Market Foundation from March this year, entitled “Fairer, warmer, cheaper”. That report is a good starting point for the discussion about the form that a social energy tariff might take.

As we have heard, the Social Market Foundation concluded:

“The current system of policies supporting households with high energy bills is inadequate for an era of high energy bills”—

one that is, I fear, likely to continue for the foreseeable future. It recommends a social tariff arrangement whereby households that spend an excessive proportion of their income on energy bills should receive targeted financial support to reduce those bills in the form of a social tariff. The Social Market Foundation also points out that the precise form of the social tariff warrants further consideration, but its own analysis suggests that the most progressive and fiscally efficient form is a lump sum payment. I will return in a minute to the precise form that the tariff might take.
The Social Market Foundation believes that the social tariff should be funded from general taxation—a view that the hon. Member for Motherwell and Wishaw articulated and with which I concur. It also rightly emphasises that at the same time as we introduce an energy social tariff, we need to significantly expand the energy company obligation scheme so as to improve the energy efficiency of homes. As we have heard, we have a very leaky housing stock; we have made some progress in improving it, but there is a long way to go. It is absolutely vital that we are not diverted from that pressing and crucial task, and we must significantly step up our efforts in that regard, with funding for the ECO continuing to be raised via on-bill levies.

As I have mentioned, the issue on which there is some dispute and where there is a need for discussion is the form that the tariff should take: whether it should be a social tariff or what is known as a block tariff. That is a complicated debate and I am not going to go into it in any great detail now—that is why we need the consultation that I am going to plead for in a minute, and which the hon. Lady already asked for. National Energy Action, which does great work in this field, favours a social tariff: it believes that a block tariff would be distributionally unfair and would create very vulnerable users. The counter- argument in favour of a block tariff is that it would incentivise energy efficiency, which should be a long-term goal and objective and is a challenge we must not shirk.

In conclusion, although I shall not go into any detail as to the design of the tariff, we need to get on straightaway and talk about it. It is ironic that, as the hon. Member for Motherwell and Wishaw said, we are having this debate the day after this year’s autumn statement. If we go back a year to the autumn statement of 2022, my right hon. Friend the Chancellor undertook to

“develop a new approach to consumer protection in energy markets, which will apply from April 2024 onwards.”

That commitment was reiterated in the April just gone by the Department for Energy Security and Net Zero, which set out the intention to consult this summer.

This is a very important task, as well as an incredibly complicated one, and we need to be getting on with it as quickly as possible. April 2024 is six months away, and I am not sure that that provides us with sufficient time to have an energy tariff in place for 2024-25. I know that there will be other distractions but, for an awful lot of vulnerable people, it is vital that we put that longer-term arrangement in place. I am not begrudging the support that has been given—the sticking-plaster approach of short-term support—but the longer-term approach is vital.

I would be grateful if, in her summing up, my hon. Friend the Minister, who does great work in this policy area, could provide us with details of when the consultation will get under way. Time is of the essence. We will not have it in place this winter—no way— but we do need it in place for 2024-25.

3.41pm
Steve McCabe (Birmingham, Selly Oak) (Lab)

It is a pleasure to see you in the Chair, Sir George. I congratulate the hon. Member for Motherwell and Wishaw (Marion Fellows) on securing this important debate.

It is pleasing that the Ofgem chief executive has called for a “serious assessment” of an energy social tariff and that energy suppliers are saying they stand ready to work with the Government to deliver one. That leaves me curious to know what the hold-up is. Surely it cannot be that difficult if water companies and broadband businesses already use this very approach. We are not used to congratulating water companies in this place, but I am aware that Severn Trent and, I believe, all the other water companies in the country use a scheme called WaterSure, which is a social tariff to cap water bills for vulnerable households. Ofcom goes out of its way to advertise social tariffs for broadband and phone packages for those on benefits—the very people I assume the Chancellor expects to work from home on pain of losing their benefits.

As we have heard, in last year’s autumn statement we were told that the Government planned to consult this summer on long-term measures, including a social tariff. Perhaps I missed the Chancellor’s update yesterday, but I would be grateful if the Minister could update us on what has happened to the consultation on the energy social tariff and when she expects to announce some progress.

This is a particular issue for disabled people and those with long-term medical conditions. A survey for the disability equality charity Scope, which the hon. Member for Motherwell and Wishaw mentioned—it is very active in Scotland and throughout England—found that in the west midlands, the region I represent, the number of disabled people getting into debt because of energy costs was double that of non-disabled households, and around 37% of disabled people said they were reduced to buying lower-quality food, skipping meals and often eating less than they felt they needed. There are numerous reports—I recall questions in the House and a debate on this—of people who need their homes at constant temperatures because of their medical conditions. Those who suffer from severe arthritis would be a good example, as would those who rely on medical devices to keep them alive. Those people are having enormous difficulty paying bills.

I assume the Minister will tell me that there is an NHS electricity rebate scheme for some kinds of equipment—I think dialysis machines are one example—but she will also be aware of recent research that suggests that that support is reaching only a relatively small proportion of eligible consumers, and often fails to reflect the costs of running the relevant technology. The problem is that it not only threatens their health but impacts on their general wellbeing and quality of life. In too many cases, as I think Scope puts it rather well, people cannot thrive because they are too busy trying to survive. There are even accounts of people having to give up their pets—their dogs and their cats; sometimes their only companion—because they have to choose between looking after them and trying to pay excessive energy bills.

The hon. Member for Motherwell and Wishaw touched on this, but I reiterate that four groups in particular would benefit from an energy social tariff: people who receive means-tested benefits, people who receive disability benefits, those who receive the carer’s allowance, and those who are struggling with bills but are just below the criteria for support from the welfare system. Poor pensioners who just miss out on pension credit would be a particularly good example. I am sure that the Minister will have come across the same kind of people in her constituency as I have—pensioners who just fail to meet the threshold for pension credit but are struggling by all other metrics to survive.
The Work and Pensions Committee, on which I serve, recently inquired into the cost of living payments and concluded that the £150 disability payment is just not enough to support disabled people during this cost of living crisis. The Committee advised that the Government should increase the financial support for those with disabilities in proportion to the additional costs that they actually incur. It would have been nice to have heard some recognition of that from the Chancellor yesterday. There are things the Government could do in the interim. They could, as we have heard, reinstate the warm home discount for 300,000 disabled people, who lost it when the Government changed the eligibility criteria. You will remember, Sir George, that they rearranged it so that it was determined by the size of the property, which meant that many people who had previously qualified lost access to that support.

The Government might also consider extending the proposed ban on prepayment meters to cover homes where there is a disabled person, and permit households where one has already been installed to have it removed. More than 30% of those in energy debt are on prepayment meters. As we have heard, in the absence of a scheme that, with the best will in the world, almost certainly will not be available this winter, the Government could extend the energy price guarantee for disabled households until such time as a social tariff is introduced. I do not doubt for a second that the Minister shares my concern about the struggles the people I have referred to are experiencing, but it would be good if she could reassure us that the Government have listened and will act to address the issue.

3.49pm
Dr Alan Whitehead (Southampton, Test) (Lab)

I will not go into great detail this afternoon on behalf of the Opposition on the background and the need for a social tariff, or a similar instrument, because the hon. Members who have taken part in the debate have made the case for one excellently. I congratulate the hon. Member for Motherwell and Wishaw (Marion Fellows), who introduced the debate, not only on the debate, but on the comprehensive way in which she presented the case for social tariffs and urged the action that needs to be taken.

I very much commend the contribution—thoughtful, as always—from the hon. Member for Waveney (Peter Aldous). On other occasions, I have said that he is virtually an hon. Friend on these issues. I commend him for the forthright and detailed way in which he not only made the case for social tariffs, but also talked about what we ought to be talking about this afternoon, which is what happens after we have concluded that this is the right thing to do. He covered the fact that the onus is on the Government to take action and what considerations we have to undertake to secure not just a sticking-plaster solution for perhaps one winter, but something that applies long term and targets the right people in society, giving them the help that they need to keep their energy bills affordable.

I also very much commend the contribution of my hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe), my actual hon. Friend. Among other things, he set out the groups of people involved. In particular, he talked about those in very difficult circumstances that have not just arisen from the energy price shock that we had a little while ago, but that affect their daily living requirements on a longer-term basis. They are the people who would very much be eligible and we should think very seriously about ensuring that those people have that long-term social tariff support.

That point is very much underlined by Ofgem’s very recent announcement on the energy price cap. The announcement underlines—if underlining were necessary —just what a difficult situation the people we are talking about continue to find themselves in. The price cap comes to just under £2,000 for a dual fuel tariff. Of course, that is not the actual bill that anyone will pay; it is an average of the sort of bill that people can expect to pay under the price cap. A lot of people—particularly those in disadvantaged and difficult situations—will pay a huge amount more, either because of their need for constant heat, because of their circumstances, or because they have other issues such as a combination of difficult living circumstances, inadequately insulated homes and high heating bills all at the same time. The price cap is the very least indication of where a lot of those people will be. Not only that, but we know from projections that the cap will be something like that for a very long time to come.

The price cap is not a way station in the downward curve of energy bills for the future. All the projections we have, particularly from Cornwall Insight  are that it is likely to remain at the same level, certainly throughout 2024 and probably going into 2025, and that they will not dip much below about £2,000 on average. As recently as April 2021, the price cap was precisely half that amount.

The people we are talking about are faced with the prospect of paying twice as much as they were as recently as two years ago for the next two or three years, with all the affordability issues that that will continue to bring into play. That underlines the point made by hon. Members this afternoon. It would be great if we had a social tariff this winter that could effectively continue the price support that has been applied previously, but that energy price support is coming to an end. After this winter, at the latest, it is not being replaced. That underlines the fact that a social tariff should not just be for Christmas—it needs to endure in providing assistance and help for those groups in society.

That is the problem with the other key point that has been mentioned this afternoon—namely, where is the consultation? It is not that the Government have said that a social tariff is a terrible idea that will never be done by Government ever. It is difficult to remember exactly which Minister of State for Energy it was, because they keep changing, but in January the Minister said:

“we will look at a social tariff and at how vulnerable people are looked after, but we have to look at it in a considered manner.”[—[Official Report, 25 January 2023; Vol. 726, c. 1031.]](/search/column?VolumeNumber=726&ColumnNumber=1031&House=1)

On 18 April, the then Secretary of State for Energy Security and Net Zero said:

“We do think that things like a social tariff could be very helpful”.[—[Official Report, 18 April 2023; Vol. 731, c. 111.]](/search/column?VolumeNumber=731&ColumnNumber=111&House=1)

Then, in May, the Government stated, in response to a petition:

“The Government is considering potential approaches to consumer energy protection post-April 2024. The Government intends to consult on options in summer 2023…Government officials are considering potential options, including discounted tariffs, for a new approach to consumer protection in energy markets that will apply from April 2024”.
They have said all these things. They have said that there will be a consultation. What has not actually happened is a consultation.

It is difficult for us in this Chamber to home in on what a social tariff might look like, because the Government have not said anything about the sort of area that the social tariff would fall into as part of any consultation. We do not need just a consultation; we need to see the substance of that consultation and what the Government are minded to do about the commitments they have already made. That is completely lacking at the moment.

We can speculate to some extent on why there has been no consultation. Personally, I think the Government were rather hoping that this energy price crisis would be completely a thing of the past by now, and that instead of the energy price trajectory going down and flattening out, there would be a more straightforward downward price trajectory so that we would return to the position in 2021, when prices were about £1,000. Then the Government could say, “Well, actually, we don’t need a social tariff because it is much more affordable for everybody now, and we can tweak various other forms of assistance to make sure that life is good.” That has not happened. The data from just the past few days shows that it has not happened and will not happen in the near future, which should concentrate minds about what solutions need to be proposed.

This may be a little bit of speculation, but perhaps the Government are thinking, “Well, maybe we do need a social tariff.” But as hon. Members have mentioned, where will that be funded from? Will it be smeared across customer bills? Will it come from general taxation or some other arrangement? Of course, because there is no consultation, we do not know what the Government are thinking.

I could see the Government thinking, “Ooh, we’ve spent all this money on price support during the height of the crisis. Do we want to commit ourselves to another fairly substantial amount of taxpayer support for energy bills for the future?” Many of us would say the answer is yes, they should. But the Government may have other views and, indeed, there may even have been tension between Departments on the enactment and funding of that policy. I do not know, but that could have been the case.

There are ways of establishing a social tariff—the hon. Member for Waveney alluded to this—that do not actually cost the amount of money that the Government perhaps think it will. They involve changes in how the energy retail market works, but can deliver very solid back-up arrangements for social tariffs on a sustainable basis, which is what we all want, without that necessary and apparently large chunk of money coming from the Treasury. Again, as was the case for the hon. Member for Waveney, it would be inappropriate to expatiate on that at great length this afternoon, but I think that there are interesting ways we can examine it.

Steve McCabe

I am extremely grateful to my hon. Friend, who is making a very valuable point. It would be very helpful if the Minister could tell us what discussions the Government have already had with the energy suppliers and the director of Ofgem, since they have both indicated that they are in favour of a social tariff. Some of the work referred to by my hon. Friend must have been done—we just need to hear what has been discussed.
Dr Whitehead

My hon. Friend is absolutely right. Basically, what we need on the table now is—as they say about homework—for the Government to show their workings. That is why I emphasised that we need not just the promise of a consultation, but a consultation with some substance in the consultation document. We need to see how the thinking process has emerged and what propositions there might be. I agree that getting a social tariff right is quite a long way further on from deciding that there should be one.

It is absolutely right to undertake that process, but we have virtually no information. The Government have certainly not conveyed anything to me about their workings. All I know, along with everybody else, is that there is no consultation. It appears that no action is taking place at all. I would certainly be happy to talk to the Minister about ways to establish a decent social tariff without placing a substantial burden on the taxpayer in order to bring it into being over time. That is an open offer, but we will see whether it is taken up.

To conclude, the onus is on the Minister to stand up this afternoon to say that first, yes, there will be a consultation; secondly, that although we have missed out on help that could have come forward this winter, we will urgently consider what can be done in the meantime to help stabilise some of those bills in light of the new price cap for this winter; and, thirdly, that the Government, as my hon. Friend the Member for Birmingham, Selly Oak has said, will lay their workings on the table at a very early date so that we can collectively take part in the debate as to how we get a social tariff that works in the long term and that protects the people and makes their energy affordable in the way that we all want.

4.05pm
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)

This is an incredibly important issue, and I thank hon. Members from across the House for their contributions to the informed, interesting and heartfelt discussion. I particularly wish to thank the hon. Member for Motherwell and Wishaw (Marion Fellows) for raising this important topic for debate and for the previous conversations that we have had on this subject—I have had similar such conversations with many Members across all political parties. I also thank the hon. Members for Birmingham, Selly Oak (Steve McCabe) and for Southampton, Test (Dr Whitehead) and my hon. Friend the Member for Waveney (Peter Aldous) for their valuable contributions to this important debate.

As the Minister for energy, consumers and affordability, I am working really hard to try to bring down bills for households and to tackle fuel poverty as it is clearly the most important thing on my mind. I recognise the challenges that families face and continue to stand firm behind energy consumers.

Last winter, as Members will know, we spent £40 billion on an unprecedented package of support for households and businesses. That meant that a typical family have saved £1,500 through the energy price guarantee and energy bill support scheme since last October.

The hon. Members for Motherwell and Wishaw and for Birmingham, Selly Oak both raised the important issue of support for disabled people, particularly those with in-home medical equipment. The Government’s support package assists the most vulnerable with rising energy bills, including charges incurred by patients dependent on medical equipment and devices as part of their homecare. I am reminded of my mother who suffered with chronic obstructive pulmonary disease and who sadly died at the age of 67, so I am very conscious of the kind of care that we should be giving to this important group of people.

We have certain specialised NHS services, which include the provision of financial support to offset increased energy costs faced by patients using medical equipment at home. Home oxygen suppliers, as I have previously mentioned, also reimburse patients for the cost of electricity that is required to run oxygen-concentrate devices in a patient’s home.

As the departmental ministerial disability champion, I am aware that energy prices are a major concern for those with a disability or a long-term health condition. I am proud of the support that the Government offer to those with disabilities. That includes, for example, more than 6 million people across the UK eligible for extra costs disability benefits who have already received the £150 disability cost of living payment. It also includes the personal independence payment, which pays up to £172.75 a week to those with the greatest additional needs. Our national disability strategy, published in 2021, sets out the actions that the Government are taking to improve the lives of disabled people.

Members have my assurance that I continue to discuss with charities how we can best tackle fuel poverty and other such issues. I have had many recent meetings with Mencap, Scope, the Motor Neurone Disease Association and Citizens Advice, as well as many other stakeholders.

We set out in our 2022 autumn statement that we were exploring the best approach to consumer protection as part of wider retail market reform. The outlook has improved significantly since then, with the Ofgem price cap more than halving since its peak earlier this year. However, even with prices dropping, energy bills represent a challenge to many low-income and vulnerable households, leading to debt and self-disconnections. We have taken additional steps to support those households. The term “social tariff” means different things, but ultimately it is about providing financial support to those who struggle to afford bills, for one reason or another. We are approaching that in three ways. First, we are working closely with Ofgem, which I have very regular meetings with, and suppliers—of course, as the hon. Member for Southampton, Test asked, I have meetings with suppliers —in relation to those facing energy issues such as debt. Secondly, we are supporting those who face challenges particularly linked to energy—for example, because they live in a poorly insulated home. Lastly, we are supporting those with cost of living pressures.

However, it is important to consider any further energy support in the context of wider changes to incomes and Government support, including that which my right hon. Friend the Chancellor of the Exchequer set out in yesterday’s autumn statement. Although prices have stabilised, they could rise in the future. It is important that any new approach can respond to a future price spike. I was listening to all the hon. Members when they talked about long-term solutions rather than just putting a sticking plaster over this. That is one of the challenges that we face.

The energy price guarantee will remain in place until the end of March 2024 to have protection in place should energy bills increase significantly during this period. The Government have also ended the prepayment meter premium by providing a discount to prepayment meter customers through the energy price guarantee. As laid out in yesterday’s autumn statement, the Government continue to invest in infrastructure and will deliver more than £600 billion of planned public sector investment over the next five years, underpinning our future growth and supporting energy security, net zero and, of course, vital public services. We have also highlighted proposals to offer electricity bill discounts for properties close to electricity transmission infrastructure. That could be up to £1,000 per year over 10 years for those properties.

In the past year, we have worked with Ofgem and energy companies to ensure better treatment for energy consumers. I chaired a supplier roundtable on 24 October. I have of course had previous discussions, but at this meeting we discussed how the energy market can work better for all consumers, including the most vulnerable. We have already taken steps to stop prepayment meters being forcibly installed where they should not be. Suppliers are no longer permitted to forcibly install prepayment meters in households with certain categories of vulnerabilities, including people over the age of 75 and those who may be medically dependent on a continuous source of energy or heating.

Steve McCabe

I acknowledge the work that the Government have undertaken on prepayment meters. Would the Minister be willing to consider extending that to households in which a disabled person is living?

Amanda Solloway

I thank the hon. Member for that intervention. Of course, from a prepayment meter point of view, one thing that we really wanted to ensure was that we were not penalising those who were vulnerable. I am always very happy to consider anything that would help and enable us to ensure that.

We also welcome Ofgem’s new rules to ensure that all consumers get the service that they deserve. Suppliers will now be required to prioritise vulnerable customers first when they request help, offer timely repayment plans for those struggling with bills and make customer ratings easy to find on their websites. Furthermore, the Government and Ofgem have been working to progress towards a shared priority services register, which could make things easier for customers and better prioritise services to vulnerable consumers who are dependent on a regular energy supply.

Overall, the best approach to consumer protection is to have an effective retail market. That is why we are pursuing retail market reforms that will set us on a path to unlocking competition, investment and innovation, which will empower consumers and enable suppliers to succeed and usher in new business models.

The Government are reviewing the fuel poverty strategy for England. Under the current approach, we see energy efficiency as the best way to tackle fuel poverty as it contributes to the long-term reduction of energy bills, as well as reducing carbon emissions in line with net zero. There are multiple targeted schemes in place in England to deliver efficiency measures to low-income and fuel-poor households. Targeted energy efficiency support is provided to fuel-poor households in England, Wales and Scotland through the energy company obligation.
Last winter, we extended and expanded the warm home discount scheme, which supported fuel-poor households by taking £150 directly off their energy bills. For this winter, we expect over 3 million households to receive a rebate under the scheme. As the hon. Member for Birmingham, Selly Oak said, following a public consultation in 2021 we reformed the scheme in England and Wales to better target households in fuel poverty and provide the vast majority of rebates automatically. Last winter, around 95% of eligible households received their rebates automatically, without having to take any action, under this element of the scheme. The remaining 5% received their rebates after confirming their details to the Government’s warm home discount helpline.

Under the reformed scheme, we have focused the support to households in receipt of means-tested benefits who are living in properties that we estimate to be relatively costly to heat. We have used data on benefits and property characteristics to identify eligible households, and we estimate that the reformed scheme should enable around 560,000 more fuel-poor households to receive a rebate, including around 160,000 more households with a person who is disabled or has a long-term illness. At the time of the Government’s response to the consultation, we assessed that the proportion of rebates received by households with a disability or long-term illness should remain higher than the proportion of the fuel-poor population with a disability, and higher than the proportion of the overall population with a disability. Although the reforms were not possible in Scotland, because of differences in Government-held data, we implemented an expansion of the scheme in Scotland to support more fuel-poor households. The scheme obligates energy suppliers to provide additional energy-related and financial support, known as industry initiatives, to households in or at risk of fuel poverty. The industry initiatives may include benefit entitlement checks, energy advice, energy efficiency measures, financial assistance and debt write-off, and can be given to households regardless of their eligibility for a rebate.

The Government are also assisting households’ and individuals’ rising cost of living. That assistance will total over £94 billion for 2022-23 and 2023-24. For 2023-24, it will include providing over 8 million households on eligible means-tested benefits with additional cost of living payments that total up to £900, over 6 million people on eligible extra-costs disability benefits with a further £150 disability cost of living payment, and over 8 million pensioner households across the UK with an additional £300 cost of living payment.

The Government continue to stand firm behind energy consumers, especially our most vulnerable households. The Government are determined to drive down cost of living pressures, having already met our goal to halve inflation. As set out yesterday in the autumn statement, lower wholesale energy prices have been the main driver of lower inflation, but we recognise that we must continue to monitor the situation closely. We are committed, and I particularly commit, to delivering a fair deal for consumers, and most of all for vulnerable households.

4.19pm
Marion Fellows

I thank the hon. Members for Waveney (Peter Aldous), for Birmingham, Selly Oak (Steve McCabe) and for Southampton, Test (Dr Whitehead) for their contributions. I also thank the Minister for her perspicacity; she managed to go through everything that the Government have done for disabled people and to protect consumers. However, I am still waiting to hear that there will be a consultation on an energy social tariff. I am disappointed that I have not heard that there will, because so many disability organisations have listened to this debate and wanted to hear good news.

I thank the Minister, and I note some of the work that has been done. But in spite of all that work that has been done, and that the Minister said will be done, disability organisations are still—I will use the Scottish term, which the hon. Member for Birmingham, Selly Oak will understand—ragin. The Government have to do better.

Question put and agreed to.

Resolved,

That this House has considered energy social tariffs.