Affording warmer homes

In 2024, 9 million UK households spent more than 10% of their disposable income on energy bills. This amount had doubled since 2020, leaving the average fuel-poor household needing an extra £407 a year just to cover their basic energy needs. Older government support schemes were failing to keep pace, lifting only 1.1% of struggling families out of fuel poverty.

To help find a solution, OVO commissioned the independent think tank Green Alliance to model the impact of introducing an energy social tariff. By replacing flat cash rebates with targeted percentage discounts on gas, electricity, and standing charges, our independent models aimed to get real help to the people who needed it most.

The three pathways we explored significantly outperformed the existing systems in place. Even the budget-neutral option, which matched the £2.25 billion already being spent on the Warm Home Discount and Winter Fuel Payment, proved to be over ten times more effective.

What this work achieved

We managed to build a broad, cross-industry consensus across customers, regulators, and Westminster:

• 75% of the public supported the call for an energy social tariff
• Over 100 Labour MPs urged the Energy Secretary to explore the integration of this framework into national policy
• The Committee on Fuel Poverty called for the immediate deployment of targeted tariff structures

These responses proved that while a social tariff isn’t the entire solution, it could be a vital bridge. The data showed that our framework would work best when paired with mandatory energy efficiency standards for rental properties, warmer insulation, and a permanent shift away from fossil fuels.

Everyone should be able to turn their heating on without the threat of financial debt. This research delivered a clear, data-backed blueprint to the industry showing exactly how to get there.

Read our full social tariff report