UK Budget: Chancellor Jeremy Hunt can end fuel poverty for good with social energy tariff – Andrew Bartlett, Advice Direct Scotland

As the charity running Scotland’s national advice service, we have never actively campaigned for a change in policy but the need for a social energy tariff is too great to stay silent, writes Andrew Bartlett of Advice Direct Scotland

Here is a figure that might shock you – according to the most recent estimates from the Scottish Government, almost one million households in this country are in fuel poverty. Across the UK, the figure is thought to be around 6.6 million. It’s unacceptable that, in 2024, there are millions of people in this country who are unable to afford to heat their homes properly.

The harsh reality of high electricity and gas bills forces many of the most vulnerable people to make agonising choices between heating and eating. Even more concerning is that the issue of fuel poverty – defined as when more than ten per cent of a household’s net income after housing costs is spent on fuel – existed before the current cost-of-living and energy crises and will continue long after they have passed.

In our role as the national energy advice service, we have witnessed first-hand the struggles of families, pensioners, and those with illnesses who are facing the anxiety of falling into debt and the threat of disconnection. It’s clear that energy affordability is a long-term problem requiring a long-term solution. That’s why we are now calling for the introduction of a UK-wide social energy tariff to fix the broken energy market.

Fuel poverty is a serious problem for millions of people (Picture: Help the Aged/PA)

Put simply, a social energy tariff would give discounts on gas and electricity bills to people who need it most. If you meet certain criteria, like having a low income or receiving benefits, you would pay less than others with the same provider. The policy could be targeted at those most likely to sink into energy-related debt.

Get our weekly opinion newsletter for expert analysis from The Scotsman’s team of columnists

This is not a new or revolutionary idea. Social tariffs were previously offered voluntarily by major energy suppliers, before being phased out after the Warm Home Discount was introduced in 2011. Customers who qualified for these deals included those on means-tested benefits and those living in fuel poverty or on a low income. But the problem is that not all customers who originally qualified for these social tariffs were then eligible for the Warm Home Discount – and, since then, the cost-of-living crisis has pushed more and more households to the brink.

To their credit, some energy companies already operate funds designed to help people who are struggling, but provision is patchy. Only a UK-wide social energy tariff can effectively end fuel poverty once and for all. It is also absolutely essential that the policy is opt-out, not opt-in, meaning that eligible customers do not have to take action to be offered the cheapest deal.

Without automatic enrolment, thousands, if not millions, could miss out on the benefits. Why are we so convinced of this? Because we already have evidence on social tariffs from the broadband industry, which uses them under an opt-in system. Ofcom research has shown that only 5 per cent of eligible households have signed up. To be blunt, an opt-in system just doesn’t work.

When you examine some of the figures around fuel poverty, it is clear that we have a moral imperative to act. According to the Office for National Statistics, almost half (44 per cent) of British adults are using less gas and electricity due to the cost-of-living crisis. One in five (19 per cent) say they are “occasionally, hardly ever or never” able to keep comfortably warm.

Being frequently cold carries major health consequences. It is estimated that around 10,000 people a year in the UK die as a result of living in a cold home, which can also cause or worsen a range of serious conditions, including heart attacks, strokes, bronchitis, and asthma.

Staff at Advice Direct Scotland are on the front line of the fight against fuel poverty. Our service, energyadvice.scot, is continuing to experience a significant surge in demand from people seeking help with bills, debts, and disconnections. Troublingly, 70 per cent of our recent enquiries relate to ‘self-disconnection’, when someone cannot afford to top up their prepayment meter.

The problem of energy debt is not confined to Scotland. Around £2.25 billion is owed by UK households who are behind on their energy bills, an increase of more than 70 per cent over the past three years. It would also be unwise to assume that because there are signs that the energy crisis might be easing, there is no need to act.

Under the current Ofgem price cap, a household’s average annual bill for gas and electricity is still 59 per cent higher than it was in winter 2021/22. If we fail to take action by introducing a social energy tariff, the cycle of fuel poverty will never be broken. Next winter will bring yet more misery, then the winter after that and the one after that.

Funding for the policy would not have to fall entirely on the shoulders of taxpayers. It could be sourced jointly by the UK Government working in cooperation with energy suppliers. Polling suggests that the public is overwhelmingly in favour of such an approach. However, it is the case that a UK-wide policy can only be set at Westminster rather than Holyrood. This is why Chancellor Jeremy Hunt must act when he announces his Budget on Wednesday.

As the charity running Scotland’s national advice service, this is the first time that we have actively campaigned for policy change. Simply put, it is because we believe it is the right thing to do. Regardless of our political persuasions, let’s unite behind a social energy tariff and end fuel poverty for good.

Andrew Bartlett is chief executive of the charity Advice Direct Scotland, which runs the national advice service advice.scot, debt and money advice service moneyadvice.scot, energy advice service energyadvice.scot and consumer advice service consumeradvice.scot