Ministers should stop dithering. A social tariff for energy is essential
Price cap down, bills up anyway. Welcome to the complexities of today’s energy market. Until the cap takes another lurch downwards – expected to happen from July when the backward-looking formula fully catches up with lower wholesale gas prices – the relevant measure for most households remains the government’s “energy price guarantee”, or EPG.
On current plans, the EPG will rise from £2,500 to £3,000 in April; and critically, the universal £400 subsidies will be yanked away at the same time. So, even if one can confidently predict some relief in bills from mid-summer, the next leg of the energy crisis will be harder than the last. In the circumstances, the calls from the campaigner Martin Lewis and many others for an extension to the support scheme are compelling.
It is estimated that extending the £2,500 threshold for three months would cost the government another £2.6bn, which is a tweak in the context of the cost of the EPG scheme so far. And it would be the right thing to do. One hopes the spectacle of BP’s board pondering whether to give its chief executive a full £11.4m bonus, or ask him to rub along on, say, £10m, will usefully crank up the political pressure.
But there is also a wider issue here – one highlighted by Jonathan Brearley, the chief executive of Ofgem, as he announced the latest price news on Monday. “We also think that, with bills continuing to be so high, there is a case for examining with urgency the feasibility of a social tariff for customers in the most vulnerable situations,” he said.
You bet there is a case. Even the lower projections for the next couple of price caps will not feel remotely comfortable for those at the bottom end of the income spectrum. The consultancy Cornwall Insight forecasts
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