On Wednesday 14 July, the APPG Debt & Personal Finance and the APPG Fuel Poverty held a joint online event on ‘Keeping up with bills: how to ensure a fair and affordable transition to net-zero’. Guest speakers at the event included Steve May, Head of Retail Energy at BEIS, along with representatives from National Energy Action, Fair By Design and Energy UK.
Steve May, Head of Retail Energy at BEIS detailed how fairness and affordability need to be at the heart of the Government’s transition to net zero. He said the Government recognised that many low income / fuel poor households pay more towards their energy than average households. The Government has put in place several key interventions to protect consumers from higher bills in the form of the default tariff price cap and Warm Homes Discount.
Mr May highlighted the Government’s current thinking on how to keep bills as low as possible and meet fuel poverty targets for 2025 and 2030: competition, targeted support, and improving energy efficiency all play an important part. Key measures include the Government’s launch of trials for opt-in and opt-out switching. Ministers are consulting on better targeting of the WHD, as well as launching a £4 billion extension of the Energy Company Obligation energy efficiency scheme.
Adam Scorer, Chief Executive of National Energy Action described two points of principle that should underpin the transition to net zero. Firstly, support should be guaranteed to those who are eligible and not subject to postcode or other lotteries beyond claimants’ control. Second, across all these changes, the ‘worst first’ principle should be applied, supporting those in the worst circumstances before others.
A major concern is rebalancing policy costs, levied primarily on gas bills, to incentivise initiatives designed to move us towards net zero, such as heat pump boilers. Mr Scorer said it is unconscionable that these costs should fall on the fuel poor: ‘not a penny more from the fuel poor’ should be the golden thread running through all efforts to ensure a just transition.
Mr Scorer added that cuts to Universal Credit due in October are likely to mean many more households being plunged into fuel poverty. National Energy Action is calling for more proactive efforts to target support to those in the greatest need. This means going beyond forbearance, and includes greater support for matched payment schemes to pay down energy debts.
Carl Packman, Head of Corporate Strategy at Fair By Design highlighted the poverty premium where low income consumers pay more for basic necessities, which is a major issue in the energy sector. Fair By Design’s work with the University of Bristol had shown how customers on prepayment meters pay £57 more per year than those on average standard dual fuel packages – which by themselves are far from best value.
Mr Packman pointed to some key barriers to engagement that mitigate against information and switching remedies. This includes digital exclusion, time poverty, low trust in suppliers and the perception that switching leads to little gain. In response, Carl argued that systems need to be designed with consideration for the needs of groups experiencing these barriers – the best way would be by working in collaboration with low-income groups themselves.
Audrey Gallacher, Deputy Chief Executive of Energy UK set out the support from the UK’s energy suppliers for the transition to net zero and the recognition that it needs to happen. The UK is world leading in reducing emissions in the power sector, which are down about 70% since the Climate Change Act came into effect. Ms Gallacher said politicians should have the confidence and the courage that people will support the big changes required on the road to net zero.
Ms Gallacher reiterated how energy suppliers have been at the forefront of delivering government policy support to their customers. She noted that the UK has the oldest and least fuel-efficient housing stock in Europe, and better incentives are needed to transform it. Energy UK point out that the top 7 energy suppliers made a loss last year and that the Government needs to make bold decisions on net zero with cross-party support.
Following a question on social tariffs, Mr Scorer explained that the language of social tariffs is tainted in the eyes of suppliers as previous schemes were complex to access and difficult to understand. A social tariff would need to be designed by Government rather than firms with the starting point what is affordable for households not supplier costs. Mr May concurred: social tariffs are complex and could create as many losers as they do winners, so the Government is looking at other ways to plug gaps in existing support.