Why social housing providers should back an energy social tariff

In the last two years we have witnessed unprecedented increases in the price of gas and electricity. In response, charities and civil society groups have advocated for the introduction of a social tariff in the energy market. CIH policy and practice officer Matthew Scott argues that the social housing sector should throw its weight behind a social energy tariff.

The energy crisis

Despite generally living in more energy efficient homes than private renters or owner occupiers, social housing residents have not been immune soaring gas and electricity prices. Child Poverty Action Group estimate that since April 2023, around half of social housing residents have been spending over 20 per cent of their incomes on gas and electricity. Social housing residents are also among those most vulnerable to the cold, with the highest proportion of long-term illnesses and disabilities of any tenure.

More recent ONS data from the winter paints a grim picture of what we can expect to see once the summer ends. This data showed that 61 per cent of renters were finding it difficult to afford their energy bills, something we can expect to see repeated in the winter months this year. We desperately need a solution to high energy prices, which are estimated to persist until the end of the decade. This is where a social tariff can play a role.

What is a social energy tariff, and how can it help?

A social tariff in the energy market – advocated for by Age UK, National Energy Action, and others – would be a discounted energy tariff for those in the greatest need. It would be set below the price of the cheapest available deal on the market, and ensure that whatever level wholesale energy prices reach in the future, those on the lowest incomes and most vulnerable to the deleterious impacts of the cold would still be able to keep their homes warm and lit.

In its basic form, a social tariff would support a substantial number of social housing residents in fuel poverty and struggling with their energy bills. Age UK have proposed that, among other criteria, receipt of means-tested benefits would be one of the ways that eligibility would be conferred.

If, as an example, we consider Housing Benefit, the 2023 UK Housing Review shows that there are approximately two million housing benefit claimants in the social rented sector. If Age UK’s eligibility criteria was adopted, all would benefit from a social tariff. And while there would likely be considerable overlap with housing benefit, Age UK’s list of suggested eligibility criteria, which includes disability benefits and carers allowance, would capture many more of the most vulnerable residents living in social housing.

The benefits would be substantial. While dependent on the exact design of the tariff, preliminary analysis by Child Poverty Action Group suggests that a social tariff could cut fuel poverty rates in local authority and housing association homes by over 50 per cent.

Co-benefits for asset management, tenancy retention, and net zero

The primary purpose of a social tariff would be to ensure affordable energy for low-income and vulnerable people. But it also comes with at least three co-benefits for the social housing sector that are worth noting.

• Ease pressure on repairs, maintenance and asset management

Making energy more affordable would reduce the number of tenants cutting back on heating which can therefore inadvertently lead to maintenance issues such as frozen pipes, or exacerbate issues that are primarily caused by poor ventilation, insulation, and housing quality, such as damp and condensation.

• Increase tenancy sustainability and rent arrears

Making energy more affordable would have the simultaneous impact of easing the pressure on rent affordability, leading to an improved regularity of payments, reduced arrears, and more sustainable tenancies in general

• Making net zero accessible and affordable

The benefits of the domestic transition to net zero must be accessible to low-income and vulnerable households, but many social housing residents with electric heating are currently locked out of these benefits due to high electricity prices. Cutting the cost of electricity in half through a social tariff could be the final piece of the puzzle in making heat pumps truly affordable not just for social housing residents, but for all low-income households.

Looking forwards

A social tariff is not a silver bullet for fixing unaffordable energy costs and must be part of a multi-pronged approach that includes improving the energy efficiency of existing homes and reforming welfare provision. But it would be an enormously welcome addition to, and an effective replacement for, the different forms of short-term financial support the government has implemented to support people through the energy crisis.