Some of the UK’s least well-off households could be left more than £200 worse-off on their energy bills this year because of reduced government support, the consumer body Which? has warned.
Joining calls made by other campaigners, it said the government urgently needed to introduce a “social tariff” for gas and electricity to protect the most financially vulnerable.
Consumers have been spared an increase to their energy costs equivalent to £500 on the typical annual bill – originally planned to come in from 1 April until a government U-turn.
However, a separate scheme that provided all households with a £400 discount – giving them £66-£67 off their energy bills every month from October 2022 to March 2023 inclusive – has just come to an end.
Which? said that even with the government’s decision to keep the energy price guarantee at £2,500 for an average household until July rather than putting it up to £3,000, millions of low-income consumers would still face higher energy bills this financial year.
While analysts have predicted that annual energy bills could typically fall to about £2,000 from this summer, consumers will still be paying almost double what they were before the energy crisis began.
Which? predicted that these factors combined “will mean the poorest 10% of households will have to spend an average of £209 more on energy this financial year than last”.
It said the average low-income consumer used less energy than those on higher incomes, so they would not benefit as much from the anticipated falls in energy prices, but would still feel the full loss of the £400 of additional support.
Higher costs could be particularly difficult to manage for prepayment meter users – many of whom are on low incomes – because, unlike direct debit customers, they cannot spread their costs across the whole year and so would see a spike in costs during the cold winter months.
Which? said ministers had announced that cost of living payments to those on qualifying benefits would continue, but added: “This will leave low-income households who are struggling to make ends meet but do not qualify for benefits out in the cold.”
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A properly targeted social tariff – a discounted energy rate for those most in need – was “desperately needed”, it added.
Calls for a social tariff have been growing louder, with Citizens Advice and the consumer champion Martin Lewis among those increasing pressure on the government over the issue. A recent study suggested such a tariff could save 12 million households on the lowest incomes an average of £381 a year, and up to £1,500 in some cases.
The government has announced a package of cost of living support, including a £900 “cash boost” for more than 8 million eligible means-tested benefits claimants, including people on universal credit, pension credit and tax credits, to be paid into bank accounts in three instalments between this spring and spring 2024.
