Government explores support for vulnerable households amidst energy crisis
The Government is considering “a range of support” for vulnerable households struggling with rising costs, the Energy Secretary stated, ahead of an anticipated energy price cap increase, reports BritPanorama.
Miatta Fahnbulleh acknowledged that standing charges are “too expensive” for many households and noted that ministers are collaborating with regulator Ofgem to review “how these fixed costs could be recovered in the fairest way.”
Families are bracing for energy costs to soar to their highest winter levels in three years, even with Prime Minister Andy Burnham’s plan to eliminate VAT from electricity bills starting in October.
On Wednesday, Ofgem will announce the price cap for typical gas and electricity usage across England, Scotland, and Wales for the October to December period. Forecasts suggest annual bills will rise by another 4 per cent to £1,729, driven by the ongoing conflict in the Middle East affecting wholesale energy prices.
Ms Fahnbulleh expressed her understanding of public concern regarding energy bills, asserting that Mr Burnham’s Government is “doing everything we can to make them more affordable.” She indicated that households most in need could receive additional support after being asked about the existing £150 warm home discount during an online Reddit session.
“I know in Peckham that our warm home discount will assist nearly a third of households. It’s a start, but I also know that households struggling need more help,” she said.
She added, “That is why we are looking at a range of support for vulnerable households that are under pressure. From long-term targeted bill support through to upgrading millions of homes with measures that can save over £500 on bills.”
Ms Fahnbulleh also suggested potential changes to the fixed charge on bills that customers pay daily, irrespective of their energy usage. She remarked, “I know for lots of people, standing charges are a real bugbear. The reality is that they cover fixed costs that we have to pay to keep the energy system running.”
She clarified, “We understand that for some, this is too expensive. But removing those costs would simply increase prices elsewhere on the bill, so we are working closely with Ofgem to look into how these fixed costs could be recovered in the fairest way.”
In response to calls for the abolition of all policy costs from bills, Ms Fahnbulleh emphasized that the Labour Government has “started” this process, including terminating an energy efficiency program funded by levies on bills.
She stated, “These policy costs fund important things like supporting vulnerable consumers with the costs of their bills and upgrading the energy system so that we can lower bills. We have already started doing this and did so at the budget, where we took a load of policy costs off of bills. We’ll keep looking at how these costs are recovered in the fairest way.”
Mr Burnham’s commitment to eliminate VAT from household electricity bills—which he claimed would reduce the annual Ofgem price cap by about £45 from October—will likely be counterbalanced by recent global energy price fluctuations.
Ms Fahnbulleh reiterated, “I completely understand why people are worried and frustrated about energy bills, and we are doing everything we can to make them more affordable. As a start, we removed VAT from electricity bills to give everyone some breathing space. This is on top of the £150 we removed from energy bills in the budget in April.”
She added, “We are providing extra support for six million families under pressure with our £150 warm home discount. But we know there is more to do, and we are getting on with the job of driving bills down.”
