Age UK calls for the UK Government to introduce an energy social tariff to help older people
The charity Age UK is urging the UK Government to maintain its energy support beyond April to help better support older people who are struggling to make ends meet, following an announcement by Ofgem yesterday.
Energy regulator Ofgem yesterday announced its quarterly update to the energy price cap for the period 1 April – 30 June 2023.
From 1 April the energy price cap will be set at an annual level of £3,280 for a dual fuel household paying by direct debit based on typical consumption, a reduction of almost £1,000 from the current level, of £4,279 which reflects recent falls in wholesale energy prices.
The £3,280 figure indicates how much consumers on their energy suppliers’ basic tariff would pay if the government’s Energy Price Guarantee (EPG) were not in place.
From 1 April, the Government has set the EPG at £3,000 for the typical bill – meaning that consumers will not pay the full level of the energy price cap.
This reduction in the price cap level reflects a significant reduction in the cost of buying and providing energy for customers. If it continues, it will mean that by the summer, prices paid by consumers will drop for the first time since the global gas crisis took hold more than 18 months ago.
The energy price cap was introduced by the government and has been in place since January 2019, and Ofgem is required to regularly review the level at which it is set. It ensures that an energy supplier can recoup its efficient costs while making sure customers do not pay a higher amount for their energy than they should.
Caroline Abrahams, Charity Director at Age UK, said: “Despite today’s announcement and the fact that wholesale energy prices are reported to be falling, we seem to be in the absurd position in which older people will face considerably higher bills come April.
“This will be distressing & alarming for those on low and modest incomes, who are already struggling to make ends meet.
“We urge the Government to maintain its energy support beyond April at a level which avoids a further hike in bills, a rise which is hard to understand & even harder to forgive if you’re an older person who has already been forced to cut your spending on essentials to the bone.
“Longer term the Government should introduce an energy social tariff so that older people no longer feel forced to self-disconnect or live in cold homes due to the fear of huge bills.”
New research by Age UK recently revealed strong support for a social energy tariff amongst the over-60s, with 71 per cent – increasing to 76 per cent of those with a disability – agreeing that a social energy tariff should be available for those who need it most.
Jonathan Brearleym Ofgem CEO, said: “Although wholesale prices have fallen, the price cap has not yet fallen below the planned level of the Energy Price Guarantee. This means, that on current policy, bills will rise again in April. I know that, for many households this news will be deeply concerning.”
“However, today’s announcement reflects the fundamental shift in the cost of wholesale energy for the first time since the gas crisis began, and while it won’t make an immediate difference to consumers, it’s a sign that some of the immense pressure we’ve seen in the energy markets over the last 18 months may be starting to ease.
“If the reduction in wholesale prices we’re currently seeing continues, the signs are positive that the price cap will fall again in the summer, potentially bringing bills significantly lower.”
“However, prices are unlikely to fall back to the level we saw before the energy crisis. Even with the extensive package of government support that is currently in place, this is a very tough time for many households across Britain.” The next quarterly price cap update will be on 26 May 2023.
