Fairer, warmer, cheaper
Think tank: Social Market Foundation
Author(s): Amy Norman; Scott Corfe; James Kirkup; Daisy Powell-Chandler
March 8, 2023
This report from UK think tank the Social Market Foundation looks at new energy bill support policies to support British households in an age of high prices.
This report from Social Market Foundation think-tank provides a new policy framework for energy bill support policies, that should be in place from 2024 and beyond. The current system of policies supporting households with high energy bills is dangerously inadequate for an era of high energy bills. This report is the concluding chapter in our energy bills joint project with Public First, commissioned by Citizens Advice, is out. Having laid out the inadequacies of the current approach to bill relief and some policy options in our interim report, we present our conclusions and recommendations. For 2024 and beyond, the Government needs to put in place a social tariff, with qualifying households automatically receiving discounts on their energy bills because they are paying over a certain share of their income. The Government will need to develop a new mechanism for identifying these households – based on HMRC’s income data and energy suppliers’ energy use data – to capture the complex relationship between income, energy use, and need for financial support. The value of the discount should be calculated as a formula-based lump sum payment, which would be the most progressive and fiscally efficient option, and this should be funded by general taxation. We also looked at energy-efficiency measures, to prioritise fuel poverty over aggregate demand reduction, but keeping the latter a high priority of public policy in other areas. Using the enhanced targeting system recommended in this report, the scale and ambition of the ECO regime should be significantly expanded. The new policy framework should be in place by 2024 – to ensure warmer homes, fairer use of public money, and overall cheaper bills. Other parts of the project – including polling, workshops and focus group summaries – can be found on the project website: www.smf.co.uk/future-of-energy-bills