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In the News

Calls for Social Tariffs mount when energy price support ends

Graham Watson

19th January 2023

A number charities and non-profit organisations are calling for the government to maintain its intervention in the energy market after April for those on the lowest incomes by offering a social tariff for the poorest in society. Quite how this will operate would be interesting to see, but effectively its intention would be to shield those people on low incomes if energy bills remain high.

From an evaluative perspective, it will have an opportunity cost, it also affects incentives within the market and I'd wonder whether or not it is 'good economics'...

What is a social tariff?

A social tariff is a type of pricing structure that is intended to make essential goods or services more affordable for low-income or vulnerable customers. Examples of social tariffs in the UK include:

  • The Warm Home Discount scheme, which provides a one-off discount on electricity bills for eligible low-income households during the winter.
  • The WaterSure scheme, which provides a cap on water bills for households with a high number of people or with a member who has a medical condition that requires a lot of water.
  • The Home Energy Assistance Target (HEAT) scheme, which provides assistance with heating costs for low-income households, particularly during the winter months.

These social tariffs are typically funded by a combination of government subsidies and surcharges on the bills of non-eligible customers

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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