Advocates for consumers and charitable organisations seek a policy that aids British households hardest hit by high bills.

Charities and consumer advocate Martin Lewis have increased pressure on the government to apply a “social tariff” for energy that could save 12 million low-income households up to £1,500.

Citizens Advice and Lewis have backed an initiative to announce a special tariff for those struggling to pay their gas and electricity bills by next year, and energy suppliers have stated that they are “ready” to implement the proposals.

The energy crisis, which the conflict in Ukraine has exacerbated, has sharply increased household costs, prompting calls for a revision of gas and electricity billing. 

The prepayment meter scandal has heightened the need for assistance for struggling households.

The government and energy regulator Ofgem are examining the construction and funding of a social tariff designed to shield low-income households from energy price increases.

Using a combination of HMRC and energy supplier data, a major report by Citizens Advice, Public First, and the Social Market Foundation concluded that a tariff could be designed to identify consumers with high energy use related to their household income.

The authors argue this tax should be wider than consumers receiving means-tested benefits. They stated that it could be paid through a lump-sum government cash payment deducted directly from bills based on a predetermined formula.

The report also proposed a fixed discount on utility bills, with larger reductions for lower-income households and discounts on the units of gas and electricity consumed.

According to the study, twelve million households will face “crisis level” energy costs if the chancellor, Jeremy Hunt, does not reverse his plan to slice energy support in April at this month’s budget.

If Hunt maintains the government’s price guarantee at its current level, 10 million households will spend more than 10% of their income (excluding housing costs) on energy. The study, which followed a nine-month consultation, revealed that over 12 million households with the lowest incomes would be eligible for support, and their average annual energy bill would be reduced by £381, with some receiving as much as £1,500. It would cost the Treasury £5.6 billion.

Clare Moriarty, chief executive officer of Citizens Advice, stated, “A social tariff prevents millions of individuals from incurring high bill costs.

“High energy prices force too many individuals to choose between heating and eating. Uncertainty regarding future high prices adds to the stress and anxiety felt by American households.”

Lewis supported the proposal, stating, “either all pricing should be regulated, or there should be a competitive switching market.” The expert on saving money continued, “We’ve long desired the latter scenario, but many have failed to achieve it. Therefore, we must be forthright and distinguish between legitimate and illegitimate victims of competition.”

“If, as a wealthy and financially literate individual, I choose not to switch, that is my problem. If a 90-year-old, low-income grandmother with early-onset dementia does not switch, that is our problem. A social tariff is intended to protect those in need.”

When the price guarantee scheme expires in April 2024, Dhara Vyas, the deputy chief executive of Energy UK, which represents energy suppliers, stated that firms are “eager to work with the government to make progress with support, such as a social tariff, no later than April 2024.” The report’s authors also advocated for additional measures to improve Britain’s draughty housing stock, estimating that a £1.1 billion levy on all consumers’ energy bills would save over £550 for fuel-poor households that make loft and wall improvements.