Up to a quarter of a million of Britain’s poorest households stand to miss out on chancellor Rishi Sunak’s £200 reduction in October’s energy bills because of how they pay for electricity, fuel poverty campaigners have estimated.
Charities including National Energy Action have warned that nearly 2mn households, often among the most vulnerable in the country, have old prepayment energy meters in their homes to which credit cannot easily be applied. Such “legacy” meters turn on electricity and gas only once customers have topped up a key card at a shop or Post Office.
Similar schemes in the past have tried to target those households by sending out money-off vouchers. However, under the “government electricity rebates” in 2014 and 2015, which aimed to offset the costs of environmental policies, around 10 per cent of households with legacy prepayment meters did not redeem the vouchers, according to NEA.
In some cases there were technical problems with the vouchers but there may also be concerns among some vulnerable customers that it might be a scam, NEA said. Some vulnerable people also do not open their post or do not have English as a first language.
“Drawing on these numbers as an estimate, this could mean that between 200-250,000 households with legacy [prepayment] meters could struggle to access the [latest] rebate,” said Peter Smith, the charity’s director of policy.
Gillian Cooper, head of energy policy for Citizens Advice, said there was “still huge uncertainty around how the rebate scheme will work, particularly for people on traditional prepayment meters, who are disproportionately likely to be in difficult financial situations”.
The £200 reduction, which will be applied to all households’ electricity bills, was a key plank of a £9bn package announced by the chancellor last week to help Britons with soaring energy bills.
The measures were unveiled on the same day that regulator Ofgem announced a 54 per cent, or £693, increase in Britain’s energy price cap, which dictates bills for 22mn households, to an average of £1,971 per year from April.
Within that number, 4.5mn largely vulnerable households with prepayment meters will see an increase of £708 to £2,017, which Ofgem said reflected the higher cost to serve them compared to customers paying by direct debit. An estimated 2.5mn households have newer digital prepayment meters to which the £200 credit can be applied easily.
Households will have to repay the £200 in £40 instalments over five years starting from 2023, leading to opposition politicians and campaigners to brand the policy a “heat now pay later” loan. They also point out it would not apply until October when the energy price cap is forecast to rise again, by £300-£400.
Energy suppliers have privately reported that some customers have requested to refuse the mandatory £200 discount as they do not want to pay it back in future years, or would rather it went to households in greater need.
Martin Lewis, founder of the MoneySavingExpert website, said on Thursday that more than half of 1,665 adults polled by YouGov on his organisation’s behalf would reject the £200 if given the choice.
Charities also said there was insufficient support in the £9bn package targeted at households that would most struggle to meet the sharp rise in energy costs.
NEA is pressing ministers to turn the £200 rebate into a grant for the poorest customers.
The government said: “We will consult with consumer groups and suppliers over the coming months to ensure prepayment customers receive the £200 rebate from October in a way that is convenient for them, including by the methods already used by energy suppliers to deliver the warm homes discount.”