Energy suppliers' trade body Energy UK has called on the government to overhaul the way help with bills is delivered, warning that existing support does not go far enough for millions of households, three days before Ofgem confirms the October price cap.
In a report published on Sunday, Improved Energy Bill Support, the body argues that the flat-rate £150 Warm Home Discount should give way to a permanent, targeted "social discount" that takes account of income, health and how much energy a household actually uses. Some customers, it said, are being left needing emergency help on top of the existing rebate.
Dhara Vyas, chief executive of Energy UK, said the current approach was both inadequate and inefficient.
"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."
Under the proposals, government-held income data indicating a household's ability to pay would be combined with suppliers' own records of the previous 12 months' consumption, allowing payments to be tiered rather than flat. A low-income household with high energy needs would receive £450 instead of £150. Energy UK wants ministers to convene a "social discount taskforce" of ministers, senior officials and regulatory experts, with a scheme potentially operating by 2028.
The trade body says the Warm Home Discount, expanded last year from three million to more than six million households, still misses around 2.5 million homes that need help because a medical condition or a draughty property drives up consumption, since eligibility rests solely on receipt of means-tested benefits. It also points to the cost of the untargeted response to the 2022-23 crisis, which it puts at roughly £35bn in household bill support alone, with some of the wealthiest households benefiting most.
Vyas linked the argument to mounting arrears. "Suppliers continue to do all they can to help their customers but as well as persistently high bills, record levels of debt show how the current system is failing to provide the right support to those in need," she said. Ofgem figures published in June showed debt owed to suppliers had reached a record £4.79bn, up 5% on the previous quarter, with average electricity arrears of £1,876.
The intervention lands days before Ofgem publishes the cap for 1 October to 31 December, due by Wednesday. Cornwall Insight forecasts a rise of about 4% to £1,729 a year for a typical direct-debit household, up £66 from the current £1,663 and, on a unit-for-unit basis, the highest level since July 2023. The consultancy attributes the increase to wholesale prices for the coming winter hitting their highest in almost four years amid the US-Iran conflict, outweighing the removal of VAT from household electricity bills from October.
That tax cut, announced by Prime Minister Andy Burnham in July and worth around £45 a year, runs for six months to March and costs the Exchequer roughly £850m in 2026/27. A government spokesperson said tackling the cost of living remained a priority, citing the VAT change, a shift of levies that cut about £150 from average bills in April, and last year's expansion of the Warm Home Discount.
Energy UK's plan is one of several competing designs before ministers. The Resolution Foundation has proposed a £2bn income-tested discount worth an average £175 a year, funded from public money rather than bills. Citizens Advice wants a tiered Warm Home Discount paying up to £710. National Energy Action argues the priority should instead be clearing existing debt through an expanded Debt Relief Scheme.
Ministers have not responded directly to the report. Neither the Treasury nor the Department for Energy Security and Net Zero has said whether a social discount would be funded by the Exchequer or, like the Warm Home Discount, recovered through everyone's bills.
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