Utility Week

UTILITY WEEK | JULY 2022 | 13 Energy living, no matter whatever saving measures people take," he says. "There's still a lot of people who are going to nd this winter, very, very challenging, and I would expect bad debt to increase as a result. "It would be great to nd a way of just taking those o• the bill in advance, just to make sure that that money is directed exactly to where it is needed." The Warm Home Discount (WHD) pro- vides a mechanism for pumping money directly into low-income customers' accounts, ensuring that supplies can be maintained. While the WHD's coverage of low-income customers is patchy, Bell believes this could have been expanded "rel- atively quickly" via secondary legislation. The Treasury, which was in the driving seat for the big announcement of support, had less understanding of how the scheme worked than BEIS, though, and had to nd a solution rapidly, he says. The patchy nature of the WHD also means ramping it up would not capture many of working poor households, unlike universal credit. Says Buckland: "The big challenge they've got is those who just fall out of that [WHD] net. You've got a big chunk of the package that isn't very targeted, but at least it is giving material support to every- one, which means they have not completely slipped through the net. "Prices are going up so much, there are lots of people who are clearly really strug- gling, so you do need to channel some money into those groups. The problem is how you nd them because they are not on means-tested bene ts and they're not going to qualify for the WHD discount. "They decided to do something that is universal to ensure those people got some- thing. Clearly there is a question around those on higher incomes but it's a necessary consequence of trying to capture everyone. That probably means that it's a justi able intervention overall." Copeland agrees, adding that most of the support in May's package is targeted – around a quarter of fuel poor households do not receive any bene t so would have missed out otherwise. Buckland says: "There'll be lots of house- holds who are just about managing on very low incomes. That's the rationale to main- tain and increase the universal piece because that will mean that everyone, including those people, get some level of support." Daniel Newport, BEIS's former head of heat and buildings strategy, agrees, saying: "The bene ts system is the right way to help people and it's the right way to target people that need help." The need for more sustainable interventions While the autumn's Budget will once again be dominated by the cost of living, it may not be as energy focused as recent announce- ments have been, says Buckland. And it won't be feasible for the chancel- lor to keep on coughing up the kind of huge sums he's handed out so far, even though energy prices look set to remain high, Bell says: "The government may just be hop- ing that something turns up next year, but I would not be betting the fortunes of the entire population on something turning up." Even if the Ukraine con" ict ends before then and supplies begin to return to normal, he believes it's di• cult to see a return to the status quo soon. Buckland says: "These kinds of direct payments, especially to all households, just aren't sustainable and are very expensive. "You are probably looking at further intervention to target support to low-income households but the idea of doing something universal at the scale they did this time round is unlikely." Newport, who now works for the Tony Blair Institute for Global Change, says: "We can't just drop the sort of short-term sup- port approach overnight. We should expect that to be a feature of the landscape to some extent over the next few years at the very least, but we need a more sustainable set of interventions." On the plausible assumption that energy prices will stay high for another three years at least, the case increases for a more struc- tural intervention through an increased energy e• ciency retro t programme, says Buckland: "If they're going to do anything good value in the medium term, it needs to be something that is structural rather than just near-term funding." The lack of any fresh steps on energy e• - ciency in the cost of living support package announcement was "deeply disappointing", says Bell: "There's still no understanding that reducing our exposure to these costs is always going to be the best option in the long˜run." The rst thing the government must do is crack on with initiatives they have already signed o• , such as laying down the legisla- tion for the Eco4 programme and implement- ing its promises to introduce new minimum energy e• ciency standards for new proper- ties, says Copeland. Second, he advocates the introduction of a social tari• for low-income customers that could cap on the kilowatt-per-hour price, o• ering greater savings for heavier users than the " at rate payments dished out. The scale of support on o• er means sup- pliers can a• ord to be a "little bit more leni- ent" than they could otherwise have been, says Copeland, who adds that they must also stop installing costly legacy prepayment meters. According to a report in The Times newspaper, prime minister Boris Johnson is interested in EDF's proposal to ramp up the Energy Company Obligation (Eco) pro- gramme with more government funding and help more middle-income households. The sheer scale of this year's energy price shock and the government's response cre- ates a wider macro-economic argument for these longer-term solutions, says Newport: "We are still looking down the barrel of a recession, because of the remaining impact on people's disposable incomes. How many shocks like that can you a• ord? "The central argument now for going harder on the transition is that it's not just cheaper, it's also much more stable." However, the scale of bills help dished out this year means the Treasury has set itself a big challenge, Newport says: "I would be sat there in the Treasury thinking we've set our- selves a very di• cult precedent, we should also be investing in in an exit strategy." David Blackman, policy correspondent

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