Energy firm Ovo is campaigning for reforms to social tariffs, calling on the government and wider industry to introduce a targeted tariff that would deliver discounted energy bills to the most vulnerable households. A new report from the Green Alliance think tank suggests this transformation could rescue millions from fuel poverty.
Households experiencing fuel poverty are defined as those spending over 10% of their income, after housing costs, on heating and powering their homes. At present, nine million fuel-poor households exist across England. In 2024, these households required an additional £407 to break free from fuel poverty, marking a 62% rise since 2020 according to the research. The primary forms of targeted seasonal assistance for these households are the Winter Fuel Payment and Warm Home Discount.
Ovo chief executive David Buttress told PA: “Families cannot keep living on a knife edge, worrying how they will afford their bills each winter. With gas prices still volatile, this crisis will not fix itself. The Government has the power to change things, but only if it acts now to deliver a progressive and targeted social tariff.”
The research claimed that implementing an improved targeting mechanism to identify households in need would also prevent squeezing middle income families whilst supporting more people than existing assistance programmes.
The report examined three scenarios, the first of which proposed a new tariff costing the same as the Warm Home Discount and Winter Fuel payment schemes. However, it would have a greater impact, potentially reducing fuel poverty by 12% and lifting over one million families out of fuel poverty.
The second scenario explored a wider but tiered tariff structure that could reportedly reduce fuel poverty by 19%. The third model proposed a “deep and narrow” social tariff targeting the two lowest income demographics where fuel poverty is most prevalent.
This final model could cut fuel poverty by 42%, according to the report. A survey included in the report found that 67% of the public supported the introduction of a social tariff.
Shaun Spiers, executive director of Green Alliance, commented: “Everyone has a right to a warm home in winter yet nine million households in England are still struggling to afford their energy bills following the fossil fuel price shock. The Government’s warm home discount provides a helping hand, but it has not kept pace with inflation and is only having a limited impact in reducing the number of households paying more than 10% of their income on gas and electricity bills.
“A social tariff could better protect households from volatile energy prices, which are a particular problem for those with low disposable incomes or unable to reduce their energy demand.
“With the increasingly unstable geopolitical environment affecting fossil fuel prices, there has never been a better time to ensure struggling households are properly insulated from volatile energy prices with a social tariff and warm home policies.”
