The trade body representing UK energy firms has warned that current government support is insufficient to protect vulnerable households from rising costs this winter. Energy UK argues that stubbornly high prices have left many consumers in need of emergency support beyond the existing £150 Warm Home Discount, which has seen only a £10 increase over the last decade.
Energy UK chief executive Dhara Vyas stated that while suppliers are doing everything possible to assist customers, the current system is failing those most in need. She highlighted that record levels of debt, with customers owing a total of £4.7bn at the end of last winter, demonstrate that the existing framework is inadequate. Vyas proposed a new social discount scheme, which she believes would create a system that works better for everyone.
The proposed model would require the government to allow the integration of data regarding household income, health, and energy consumption. By combining these sources, the industry argues that support could be more targeted and adjustable to changing price levels. While the initiative would cost an estimated £1.9bn—nearly double the current expenditure—it could provide up to £450 in assistance to the most affected households. Funding for this could potentially be sourced through bill levies or directly via taxpayer contributions.
The call for reform comes as regulator Ofgem prepares to announce the new energy price cap on Wednesday, which is expected to reach a three-year high. Cornwall Insight predicts a 4% increase in the cap, which will impact bills during the first half of the winter. This follows a 13% rise in July, with analysts noting that prices have been further pressured by conflict in the Middle East and increased cooling demand during European heatwaves. These increases are expected to outweigh the impact of Prime Minister Andy Burnham’s decision to remove VAT on household electricity bills.
Currently, the Warm Home Discount reaches approximately six million customers. However, Energy UK estimates that another 2.5 million people require assistance due to medical conditions or poorly insulated homes that drive up energy usage. The previous Conservative government committed roughly £40bn to support households during the 2022 energy price spike, but industry experts argue that a structural change is now essential.
Adam Scorer, chief executive of the charity National Energy Action, welcomed the proposal, emphasizing that a fresh approach is desperately needed. He noted that while the logistics of data sharing and funding remain significant challenges, the government must collaborate with charities and energy firms to design a system that effectively provides breathing space for those in fuel poverty. The report also notes that following the start of the Iran war in February, since then wholesale energy prices have risen. The report also notes that currently, people receiving means-tested benefits are entitled to the one-off £150 Warm Home Discount over the winter, something administered by the energy suppliers themselves. The report also notes that the rebate is paid for by a levy on all energy users that is collected and redistributed via bills. The report also notes that but there were another 2.5 million who needed help because a medical condition or draughty home meant they consumed more energy, energy UK said the Warm Home Discount reached six million customers. The report also notes that the last time the price cap reached a similar level was in July 2023, Cornwall Insight said, which was still below the peaks reached the previous year in the wake of Russia’s invasion of Ukraine. The report also notes that including income and health, and the proposal to find more taxpayer money to fund such a scheme are likely to raise questions, the challenge of combining sources of personal data.
