Calls for 'social tariff' amid fears energy bills could rise again

The Resolution Foundation is calling on the government to introduce a £4bn ‘social tariff’ to help households facing rising energy costs.

The proposal focuses on targeted support, rather than broad subsidies, as pressure on living standards continues.

What the social tariff would do

The plan would introduce discounted energy bills for lower-income households.

Key points:

• a 21% discount on gas and electricity bills
• available to households with incomes below £38,000, before housing costs
• average savings of £310 a year for the poorest households
• up to £520 a year for families with higher energy needs

The aim is to direct support to those most affected by rising costs.

Why a targeted approach is being proposed

The thinktank argues against a universal scheme like the one introduced after the Russian invasion of Ukraine.

It says a blanket approach:

• can be expensive and inefficient
• risks failing to prioritise the most vulnerable households

A targeted social tariff is presented as better value for money, particularly given current constraints on public finances.

Timing and rising energy costs

The current energy price cap set by Ofgem remains in place until July.

However, forecasts suggest:

• bills could rise by around 10%
• adding roughly £160 a year to the average household bill

The Resolution Foundation says there is still time to introduce a social tariff before winter.

If the policy is delayed

If the scheme cannot be implemented in time, the report suggests alternative measures:

• increasing universal credit payments
• removing some policy costs from energy bills

However, these options are described as a less effective substitute for a targeted tariff.

Social tariffs in other sectors

Social tariffs are already used in essential services:

Broadband and phone services

• discounted broadband and phone packages for people on certain benefits
• typically £12 - £20 per month, about half the standard price
• annual savings of around £200 - £250

Water bills

• many suppliers offer reduced water tariffs for low-income households
• eligibility and discounts vary by provider

Worried about rising bills?

If you’re worried about how rising costs could affect your budget, it can help to see the bigger picture.

Our free and interactive household bills calculator gives you a personalised forecast of how your monthly costs could change.

It only takes a couple of minutes to use and shows how bills may change based on where you live.