Jeremy Hunt confirms plan to permanently cut energy bills for millions of households | Personal Finance | Finance
Appearing before the Treasury select committee in parliament on Wednesday, Mr Hunt told MPs that the Government was working towards introducing an energy social tariff for low-income households. Mr Hunt explained how the benefit system had enabled the Government to target those on the lowest incomes with financial support in the current financial crisis. However, Mr Hunt wanted to introduce a more long-term solution.
He said: “I think the challenge we had, or have, is that if we want to help people quickly the benefit system is a way that we can do that.
“We know who everyone is, we have a good idea of their circumstances, so it is an efficient way to get people help quickly.
“But what I said in my comments in the autumn statement is that, whilst we’ll be using that system this year or next year, from April 2024 we want to work towards a social tariff or social discount approach – whereby we reach all people equally on low incomes.”
In his recent Autumn Statement, Mr Hunt announced he would extend support for gas and electricity bills, the Energy Price Guarantee, for a further 12 months.
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After the Statement, the HM Treasury released documents which stated that the Government was planning a “new approach” to the energy bills which included the introduction of a social tariff.
In the Treasury Committee meeting, Mr Hunt said there was “complicated” work which needed to be undertaken to get a social tariff introduced.
He added: “That means a lot of complicated work to marry the information held by HMRC with the information held by DWP on benefits, and that’s a very big operational challenge, but that’s the direction of travel we want to go in.”
Hunt’s confirmation came months after MPs on the cross-party business, energy and industrial strategy (BEIS) committee also urged the government to look at a social tariff.
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The report written by the BEIS committee consulted with experts within the energy industry who told MPs that a social tariff could knock £1,000 off energy bills for those on low-incomes.
A social tariff would fix energy bills at a certain level for those on low incomes, protecting them from volatile energy markets.
This support would be paid for through taxation or higher bills for other customers.
It is not yet clear exactly how social tariffs will work for energy prices as the Government is still considering how to implement the idea.
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It is not yet known at exactly what level it will fix energy prices for poorer consumers, all the Chancellor has announced so far is the Government is working on a plan.
Discounted social tariffs are already available from some water, mobile phone, and broadband providers.
Broadband tariffs are available to people claiming benefits including Universal Credit, and range from £10 to £20 per month in price.
There have been growing calls for such a system to provide low-income households with long-term protection against rising energy costs.
However, some groups have questioned the cost of a Government-led social tariff.
This is because British households already subsidise some of the most vulnerable through an extra charge on their energy bills.
The Government estimates that the Warm Home Discount, which gives nearly three million pensioner and low income households a £150 discount on their electricity bill, will add about £19 to the typical dual fuel energy bill this winter.
The Resolution Foundation has previously calculated that a social tariff that hands 7.3 million households in receipt of means-tested benefits a 30 percent bill reduction would cost around £6billion for the Treasury.
