LOCAL ELECTIONS 1st May 2025

15:35 Polly Billington (Labour)

Last week, we saw people’s energy bills go up by another 6%, as Ofgem raised the energy price cap again, meaning that typical households now face bills of not far off £2,000 a year. My argument for a social tariff is born out of a career spent grappling with Britain’s energy market, including in my work with the current Secretary of State for Energy Security and Net Zero in the old Department of Energy and Climate Change, where we saw, through the global financial crisis, the need to better protect consumers from volatile energy prices. Watching him trying to convince energy companies to lower their prices as the country faced spiralling costs and economic chaos convinced me that a social tariff was the least a Labour Government could and should do to protect the most vulnerable.

Much has changed since then. There has been significant success in shifting to cleaner power, as a result of a political consensus—held across this House until recently—on the need to decarbonise our energy system to tackle climate change. This Labour Government’s mission to achieve clean power by 2030 is part of our long-term solution to bring energy bills down for good. People see increasingly that there are further benefits to such a shift: greater energy security from generating our own energy rather than being exposed to the whims of petrostates and dodgy regimes, as well as a reduction in the costs of generating that power. Some 96% of newly installed solar and wind capacity has a lower generation cost than natural gas. However, consumers are not feeling the benefits of cheaper costs as much as they could, partly because our energy prices are set by global oil and gas prices.

A social tariff that supports the most vulnerable with their energy bills and prevents them from falling into fuel poverty would protect them from some of the failures of the current energy market, and shield them as that market is reformed to make the most of leaving fossil fuels behind. The energy market needs to change so that the efforts the Government are making to decarbonise our energy system truly deliver benefits for consumers. The reform of retail prices will need to be part of that.

As a member of the Energy Security and Net Zero Committee, I have heard witnesses’ growing calls for such change. The vast majority of homes are heated by gas, while electricity is much more expensive. The costs of shifting to cleaner power have been loaded on to electricity bills, creating a disincentive for many to choose to shift to electric heat. We artificially make electricity more expensive, which makes it impossible for some to move to clean power. It is those who cannot pay who are least prepared.

Rapid change has always been associated with upheaval and risk. A social tariff, working as part of the welfare state, can support people as we make these changes. This is the right thing to do from not only a fuel poverty perspective but a decarbonisation one. A modern welfare state has done this before, and it can do it again. The Labour party is the party that created the welfare state, and on these Benches, we understand why having a strong social safety net is vital, but energy is an area where the safety net has a gaping hole in it. That is why a targeted social tariff is needed—so that we can provide vital support for those in the greatest need.

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