Household income, power consumption and even health should be used to decide who qualifies for help with energy bills, a trade body says.
The October price cap will be announced on Wednesday, with projections suggesting it will reach a three-year high as the Iran crisis continues.
Energy UK, which represents the energy industry, says these costs are unaffordable for millions and urged the Government to create "a better and more enduring system" for helping those struggling. Its report says many in need are missing out and calls for targeted support in the form of a "social discount" that takes a range of factors into account.
At present, the main method for financial support is the Warm Home Discount (WHD).
This was expanded last year and now reaches six million customers, but eligibility is based on receiving means-tested benefits.
Energy UK says this fails to reflect that the need for support is driven by both income and essential energy consumption.
This can be higher because of issues such as health conditions or draughty homes.
In its Improved Energy Bill Support report, it calls for "a better targeted and more agile support scheme".
"A combination of income, health, and energy consumption data would enable more effective targeting of support and allow assistance to be better aligned with differing household circumstances," it says.
In order to collect the data and implement the scheme, it recommends a social discount taskforce be set up, including ministers, senior officials and regulatory experts.
"Our proposed model would use household income data alongside supplier-held energy consumption data to build a more complete affordability picture," it says. "Government-held income data would provide an indication of a household's ability to meet its energy costs and suppliers’ historic 12-month consumption data can identify differences in energy requirements. Bringing these together would enable households to be assessed according to both income and energy use, rather than relying on receipt of means-tested benefits as the sole proxy for need."
It also recommends the Government explore "how health data can be made available for targeting purposes".
LATEST DEVELOPMENTS
- Kemi Badenoch blasts Labour for dithering over huge North Sea gas field
- Labour told to dramatically slash VAT on double glazing if it wants to reach Net Zero
- Labour offers millions of pounds to businesses who can crack great Net Zero energy puzzle
It explains: "Some households have higher unavoidable energy requirements due to disability and it would be beneficial to utilise this information to form a more sophisticated approach to determining the level of support required."
Its proposals would see the cost of the scheme increase from £1billion to £1.9billion.
It recommends discounts be tiered according to need, with a low-income, high-energy household receiving £450 instead of the flat £150 rate.
The report urges prompt action and suggests a scheme could be underway by 2028.
Energy UK’s Chief Executive, Dhara Vyas, said: “Too many households continue to feel the strain of high energy bills. Instead of relying on stopgap, ad hoc or emergency measures, we need a better, targeted and more permanent way to give people confidence that they’ll get help when they most need it. The current arrangements fail to provide the help needed and work out more costly."
She said the new analysis showed there was "a fairer, flexible way" to help those in need.
She said: "A social discount will address the fuel poverty gap and provide the right amount of support to the right households at the right time – reflecting that needs vary across different customers. Introducing a social discount will require a lot of close working between Government departments and the energy industry – but will result in a system that works better for everyone. The current system is failing to provide the right support to those in need, amidst wider cost-of living pressures. It’s high time to accept that this situation isn’t going away and to put in place a system of support that is much better equipped to deal with that reality over the coming years."
The paper recommends support is paid for via the Treasury, rather than through bills.
It stresses targeted support should be one part of wider measures to reduce energy costs for all households.
A Government spokesman said: "Tackling the cost of living remains a key priority for this government and we know families will be worried by the prospect of higher energy bills this winter. We're acting to give consumers breathing space with the cost of living – cutting VAT on electricity bills, ensuring around six million households get the £150 Warm Home Discount this winter, and making millions of homes cheaper to run through our Warm Homes Plan. Alongside our efforts to support rapid de-escalation in the Middle East, we will do everything we can to shield consumers from global energy shocks and bring down bills for good."
The need for targeted support was highlighted in 2022, when then-Prime Minister, Liz Truss, announced the Energy Price Guarantee in the wake of the Ukraine invasion.
This cut the price of gas and electricity for almost every household – but came at an estimated cost of £24billion.
Our Standards: The GB News Editorial Charter
