Friday, 1 March 2024
Friday, 1 March 2024

Should we have a subsidised social tariff for energy?

Ollie Gray, business development director, Charis Grants Ltd writes

It’s a strange world when you consider those being forced against their will onto prepayment meters because they are struggling to pay their bills, and actually end up being charged higher prices as a result – but that is exactly what is happening.

According to the Citizens Advice Bureau, 3.2 million households were forced onto pre-payment meters in 2022 after being cut off from their supply due to an inability to cover their monthly direct debits. That’s 3.2 million who were plunged into darkness, their heating cut off.

Among these, 3.2 million are going to be those who are disabled, vulnerable, and suffering from ill health and loneliness. Also among those 3.2 million are going to be families with young children who have worked hard to pay their bills, only to start falling through the cracks as the cost of living spiralled.

Across the UK, monthly outgoings are soaring over and above normal rates, and household incomes are not keeping up with the rate of increase. Additionally, many of these households are not eligible for extra government support because they are average working households who are not in receipt of any additional benefits.

Rent increases, increased interest rates on mortgages, inflation, council taxes, and petrol – these have all compounded to create a perfect storm for families who are seeing their thin margins of disposable income evaporating into maintaining some level of survival mode.

We are in a state of real crisis at the moment, where the most vulnerable continue to struggle no matter how much money is dished out by the government. What this indicates is that a radical re-think needs to be addressed in the way that tariffs are set and regulated for those on the lowest incomes to ensure that no one risks having their power cut off, plunging them into the dark and cold.

A uniform social tariff, set across all energy companies, subsidised by the energy companies, government, and higher paying customers, could be an ideal safety net for those who are at the most risk. This would be a UK-wide tariff that all energy companies must adhere to, regardless of their own commercial tariffs, and regulated by Ofgem. As a stable economy of scale, the administration of a social tariff voucher through platforms such as the Charis Shop would prove far more cost-effective than monitoring and pursuing dozens of different energy companies.

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