The prospect of introducing a social tariff to ease the financial burden on vulnerable households gains momentum, as new research by Cornwall Insight reveals potential savings of £296.08 and £332.62 per year for eligible households.
This analysis has sparked discussions on addressing the energy cost challenges faced by those in need, especially with the recent introduction of the October Default Tariff Cap.
The data indicates that offering discounted energy deals to low income households can be achieved through two primary approaches: eliminating the standing charge or providing a 20% discount on the price cap unit rate.
For a typical dual-fuel household opting for a social tariff, this could mean a reduction in their annual energy bill to approximately £1,600 during the initial three months of 2024.
While this figure remains above historical levels for the cap, it represents significant assistance for individuals and families grappling with the challenge of keeping their homes adequately heated and lit.
However, according to the consultancy, the implementation of social tariffs comes with a cost, estimated at approximately £1.3 – £1.4 billion.
The report suggests this cost accounts for less than 4% of the government’s overall expenditure of £37 billion on initiatives like the Energy Price Guarantee and the Energy Bill Support Scheme over the past year.