Social Tariff Working Group minutes: November 2024

Attendees and apologies

• Dr Alasdair Allan, Minister for Climate Action
• EDF
• EON
• Scottish Power
• Centrica
• OVO
• Octopus
• The Wise Group
• British Gas Energy Trust (BGET)
• Consumer Scotland
• Advice Direct Scotland (ADS) 
• Citizens Advice Scotland (CAS)
• Scottish Fuel Poverty Advisory Panel

Items and actions

Agenda item 1: Opening remarks  

• the minister opened the first meeting of the social tariff working group, bringing a range of stakeholders together to progress reform that protects vulnerable consumers from price shocks, affordability challenges and ever increasing energy debt
• the powers to implement a social tariff remain with UK government. Following a positive meeting with UK Minister for Energy Consumers, Miatta Fahnbulleh, the Scottish Government have committed to sharing the outputs of the working group as soon as possible 

Agenda item 2: Terms of reference 

• the minister asked the group to agree the terms of reference (ToR), noting disagreement over the use of the term ‘social tariff’, and asked that this be raised as part of the working group’s negotiations rather than holding up agreement on the ToR
• the group agreed the terms of reference which will now be published on the Scottish Government website

Agenda item 3: Setting the context of a social tariff 

• Consumer Scotland provided a brief overview of the current support available for consumers, as well as the principles a social tariff needs to achieve, drawing on the Energy Affordability paper published in October 2024
• the existing landscape of support (e.g. Warm Home Discount, Winter Heating Payment) has been designed to respond to particular pressures and opportunities 
• it does not represent a joined-up, structured set of policies, based on a systematic understanding of consumer need 
• there are emerging developments that can provide window of opportunity for a review, including the end of Warm Home Discount and Energy Company Obligation (ECO4) in 2026, market reform, and considerations of standing charges reform
• Consumer Scotland believe a social tariff should: 

Agenda item 4 : International social tariff schemes

The minister sought views on international schemes with a focus on where best practice is evident. The following feedback was provided:

• the mechanism needs to work for each country individually with their respective nuances and energy markets 
• the GB solution should be practical and capture as many people as possible using reliable, consistent and accessible data
• data requirements should be considered on basis of need rather than availability to avoid poor targeting   
• different funding options are available and all options should be on the table, for example the Dutch model is co-funded by government and industry and this may be needed in the UK due to current budgetary pressures 
• having a bill discount approach allows consumers to choose the tariff that works for them and participate in the competitive market 
• automatically applied measures work best for consumers
• the Netherlands example demonstrates how government can work with the private, public, and third sector to share data and target support appropriately 
• an important principle should be ensuring the mechanism makes energy bills cheaper rather than putting more money into people’s bank accounts 
• support provided via an energy bill has a greater fuel poverty / energy impact than additional cash provided to the household budget.  It also provides greater surety that the policy intent behind a social tariff is being delivered
• there is an affordability crisis and considerable debt in the system so there is an urgent need to act in time for next winter
• discussion around the value of support being proportionate to the fuel poverty gap that exists
• basing eligibility on housing (energy efficiency/EPC ratings) was viewed as problematic as some in fuel poverty have no remit or power over energy efficiency of their property (e.g. renting/social housing)
• household income would be the fairest means of defining consumer eligibility due to issues with benefits uptake and evidence which suggests those in most acute need are not in receipt of any benefits
• however, household income can miss nuance, for instance, households with a low income in high quality homes may not require the same level of support as those with a higher income but with a poor-quality homes  
• government agencies have access to income levels from individuals but not necessarily households so work with HMRC and LA’s required
• an overwhelming challenge is trust, so trusted partners and charities should be able to sign people up 
• data from both industry and government will support the mechanism to work intelligently
• people in rural and island communities, some of whom are off the gas grid, will have different needs and we must take into consideration these too
• broadband social tariffs are not automatically applied and suffer from low uptake which must be avoided in the energy market
• the challenges identified have been overcome before, for example in relation to benefits data and the Warm Homes Discount in 2010

Agenda item 5: Fuel eligibility 

The Scottish Government’s position remains that a social tariff should be available to gas, electricity and alternative fuels consumers to ensure that all consumers are protected against high costs and can afford all of their energy needs. Members provided the following feedback:

• the Fuel Insecurity Fund covered all fuels and should be viewed as best practice 
• the electricity account could be used to demonstrate eligibility for the social tariff and could be used to secure a discounted tariff on alternative fuels 
• governments need to balance competing aims terms of decarbonisation and tackling fuel poverty 
• there is merit in developing a separate scheme for alternative fuels which recognises their specific needs
• if a social tariff is applied to electricity as a rebate rather than a discount on unit rate, this could provide maximum fuel eligibility 
• rebates on bills do not account for higher energy consumption of alternative fuels or indeed the often considerable once per year costs so the mechanism would need to ensure fairness 
• if applying to electricity only, it is not clear if this would support people to stay warm, which is the main aim
• if the mechanism is funded by billpayers, it could inadvertently create more fuel poverty so need to get the targeting right without placing burden on others
• Scottish Power has considered the benefits associated with a discount on the unit rate versus a payment similar to Warm Home Discounts, which you could scale for different customers groups
• it is crucial that the mechanism is implementable and so the complexities should be identified and raised with the UKG in parallel, and worked through where possible
• the scale of the rebate could be so significant for some customers that it could be cheaper to install green technology and insulation instead, especially where the costs could be spread over many years, and this should be accounted for in the mechanism 
• if you improve the fabric efficiency of the home and install green technology to enable consumers to benefit from energy transition, this will have a better outcome for households
• there may be unintended consequences of taking an efficiency and clean heating upgrade approach as it could lead to rent increases if not properly addressed in the policy
• poverty is complex and so a social tariff is only one part of a suite of measures needed to lift people out of poverty
• the mechanism needs to be in place for winter 25-26 given the level of debt in the system and wider affordability crisis
• all tariff types should be considered within the remit of the group, including the Rising Block Tariff 

The membership agreed that a social tariff should be available to all fuel users, offering transitionary protection to ensure consumers can afford their current heating and energy needs while supporting them to transition to clean heating. 

The minister thanked everyone for their contributions and noted that the next meeting would consider the issue of eligibility in more detail, including the availability of data in supporting government and suppliers to target the support. 

SG officials will engage with analytical support and wider partners to support decision making on consumer eligibility and data at the next meeting. 

Summary of Actions and Decisions: 

• Scottish Government to write to the UK Government with the outputs of the working group as soon as possible
• ToR to be published on the Scottish Government website as soon as possible
• Scottish Government to engage analytical support and wider partners to support decision making on consumer eligibility and data at the next meeting
• the group agreed that a social tariff should be available to all fuel users
• the group agreed the terms of reference