With concern growing over how events in the Middle East could increase energy bills, Energy UK is urging the Government to immediately step up efforts to ensure that any intervention to support customers is targeted at those most in need .
Although it is too early to be sure of the impact, projections from suppliers suggest customers could face a rise of as much as £250 on their annual bill. This would still be some way short of the record bills seen following the invasion of Ukraine, but the longer the conflict goes on, the greater the risk that bills reach the levels at which the Government was compelled to subsidise bills for domestic and business customers back in 2022.
Back then, the urgency of the situation and lack of ability to target support effectively meant the Government provided universal support to every billpayer – regardless of their circumstances. As a result, it cost the Treasury over £35 billion to subsidise household energy bills alone – whereas if this had been directed just at low and lower middle-income customers, it would have cost £12.5bn.
There have long been calls from the industry and customer groups to target bill support better and make use of the existing data held by other Government departments. While support schemes like the Warm Home Discount are in place, analysis has shown that this excludes 2.5 million customers who are also in need of support.
Today’s paper from Energy UK stresses there is still time to rapidly improve targeting if a significant intervention is required later in the year – especially over the winter months. It calls for the Government to immediately bring together a vaccine-style Taskforce with Ministers and senior officials from relevant departments, energy industry data experts and other key stakeholders as part of a ‘sprint’ to urgently assess options.
This could include accelerating existing data-sharing programmes like the Department for Science, Innovation and Technology’s Kickstarter programme; working with the Department for Work and Pensions and Department of Health and Social Care to identify customers already in receipt of welfare or disability payments and/or those with serious medical conditions; and enabling an application process for those who do not receive benefits but might still need support.
The paper also proposes this could be accompanied by a more limited universal measure to lower all electric bills by further reducing policy costs. Such a move would be of particular benefit to those using electric storage heaters, who are twice as likely to be in fuel poverty. It would also help to support those looking to adopt clean technologies for their heating and transport, by lowering running cost for heat pumps and electric vehicles – and so supporting the drive to make the country less dependent on gas and less vulnerable to the price spikes seen in recent weeks.
Dhara Vyas, Energy UK’s Chief Executive said:
“It is still too early to tell how significant an impact the conflict in the Middle East will have on British energy bills – but it is clearly sensible to prepare and ensure any intervention that might be necessary is both cost effective and directed to help those who most need it.
“Successive Governments have recognised the need to target support better but progress on the data-sharing that could enable this has been slow. As we saw during the pandemic and previous energy crisis, the state can move quickly and inject a sense of urgency into work when it is really required.
“It would help the country just as much outside a crisis as within one. Energy bills remain higher than they were before the invasion of Ukraine, and there is growing concern about record amounts of customer debt. Prioritising efforts to identify these customers is crucial for any potential emergency response and will also mean that we can ensure they are supported in the long term.
“Coming so soon after the last bill increase caused by global conflict, the impact of high and volatile gas prices on our energy system is a sharp reminder of our continuing vulnerability to such events. In the long term, investing in clean power technologies is the best insulation from further price shocks.”
Notes to Editors:
- Energy UK is the trade association for the energy industry, representing companies investing billions of pounds to secure our country’s current and future energy needs. From growing start-ups to major electricity generators, grid and infrastructure developers and energy suppliers, our members are driving change across power, heat, transport and flexibility. We provide a collective voice for the sector working with governments, regulators, charities and other organisations to provide crucial insight that shapes policy, offers solutions and promotes best practice. Our broad view across the whole system supports evidence-based positions which are not tied to particular technologies, and are focused on delivering strategic benefits for people, businesses and the economy. We champion initiatives such as our Vulnerability Commitment, which pushes suppliers to go beyond regulation to support customers with additional needs, and TIDE, the industry’s drive for greater inclusion and diversity. Through our Young Energy Professionals Forum, we support the development of future leaders. We are equally committed to our team and are proud to be recognised as a ‘Gold’ Investors in People employer.
