Ovo boss says Labour should launch social tariff to tackle rising energy bills

David Buttress said the Government should ‘get away from the short-term tactics’ of year-by-year handouts to tackle high fuel costs.

Households across Britain are facing increasing energy costs this winter after the regulator raised its price cap from October (Jacob King/PA) (PA Wire)

The boss of Ovo Energy has called for sweeping changes to the UK’s energy bills system so they are subsidised for poorer households, as consumers face another rise in fuel costs this winter.

Chief executive David Buttress told the PA news agency the Government should introduce a social tariff, something which is already used in the telecoms industry to help people who receive benefits like Universal Credit pay their broadband bills.

The measure, which campaign groups have proposed for several years, would likely take the form of a targeted discount energy deal for poorer customers, and could be below the price of the cheapest available standard energy tariff.

A social tariff would allow us to address the cost of energy for the poorest in our communities in a way that means, collectively, we could give them the protection they need to get through the winter months

David Buttress, Ovo Energy

Mr Buttress said: “A social tariff would allow us to address the cost of energy for the poorest in our communities in a way that means, collectively, we could give them the protection they need to get through the winter months.”

It comes as the average household energy bill is set to rise by £149 from October 1 after industry watchdog Ofgem increased its price cap.

Ovo, which is the fourth-biggest domestic electricity provider in the UK, recently announced a fresh £50 million energy bills support scheme for the winter months.

But Mr Buttress said Labour should aim to “get away from the short-term tactics” of tackling high energy bills via handouts on a year-by-year basis.

Ministers asked firms about longer term market reforms for energy bills including a social tariff at a roundtable at the end of August, which Ovo attended.

Mr Buttress told PA the Government should “be pragmatic … and look at the most efficient way” to fund it, whether that be through increases to everyone else’s energy bills or via general taxation.

We must have a grown-up conversation about how we protect the most vulnerable... A social tariff will protect all those that need that extra help with the cost of energy, not just one group or another

David Buttress, Ovo Energy

The latest increase in energy bills comes as the Government continues to face criticism over its plans to restrict winter fuel payments to those receiving Pension Credit.

It means around 10 million people will lose out this winter, with the benefit taken away from all but the poorest pensioners in the country. About 11.5 million people used to receive it.

Speaking about the policy, Mr Buttress said: “You have to look at it in the round. The Government has come in and had to take a view of the various different mechanisms and schemes, as well as the new Budget at the end of October.”

He added: “We must have a grown-up conversation about how we protect the most vulnerable… A social tariff will protect all those that need that extra help with the cost of energy, not just one group or another.”