- The Mayor is calling for the introduction of a ‘lifeline tariff’ to ensure the most vulnerable are able to heat and eat this winter
- He has also demanded the Government introduce an extended windfall tax on energy companies in order to freeze energy bills and convene Cobra to bring together leaders around a national plan to tackle the energy crisis
- The Mayor calls for Government to prioritise helping households insulate their homes as energy bills are now expected to be over £4000 by 2023
- If Government had adopted London’s Net zero pathway Londoners’ bills this winter could be thousands of pounds cheaper bringing almost 1m households out of fuel poverty
- Analysis shows half of Londoners to be plunged into fuel poverty by January price rise
The Mayor of London supports calls for an energy price freeze, which will make a huge difference to families this winter and without which household bills are likely to increase by over 110 per cent to more than £4,200 by 2023 – nearly three times higher than they were at the start of the year [1].
In London the cost of living crisis is especially severe, with the cost of housing and other goods even higher than elsewhere in the country. That’s why Sadiq is asking the Government to act on urgent calls for a windfall tax to enable an energy price freeze as well as taking further targeted action for London’s most vulnerable people in the form of a ‘Lifeline Tariff’ to protect them from the impacts to come.
London’s buildings are disproportionately old and poorly-insulated, and City Hall research shows that the average home energy bill which will hit more than £4,200 next year if no action is taken, could be reduced to £2,600 if the Mayor’s plan for a Net Zero pathway is followed, bringing nearly a million households out of fuel poverty [2]. If the current energy prices are here to stay, following the Mayor’s net zero pathway could save Londoners over £37 billion on their energy bills over the decade to 2030. [3]
An immediate action the Government could take to help address this crisis would be the introduction of a ‘Lifeline Tariff’ which will allow a minimum floor of domestic energy use before charges begin for the most vulnerable people in London. The minimum energy needed for a household would be provided for free, with any charges kicking in only once this threshold had been met. This would be the only way to guarantee people do not need to choose between heating or eating.
A system for protecting vulnerable households against initial energy costs has existed since the 2000s and still exists in the form of a rebate with the Warm Home Discount, and a system has operated in Belgium, Italy and California for a number of years. However, the sudden explosion in prices which could plunge half of London households into fuel poverty means the most vulnerable Londoners now need a ‘Lifeline Tariff’ to ensure they don’t feel they are unable to turn on their heating. This will ensure those in receipt of the Warm Homes Discount are better able to keep warm and feed their family.
The Mayor is calling on Government to listen to plans to ensure no one pays a penny more on their fuel bills and bring together a meeting of their emergency response committee Cobra to develop a plan to urgently tackle the cost of living crisis and ensure regional Mayors have a seat at the table.
At the moment, over 1 in 10 London households are in fuel poverty. If the Government refuse to accept calls to freeze bills, an increase of the price cap to £3,500, as expected to be announced this month, would plunge almost a third of London households into fuel poverty,[4] and, with the increase to more than £4,200 expected in January, this would increase to nearly half.
The Mayor is committed to ensuring Londoners are insulated to the growing cost and unsustainable volatility of energy bills by following a Net Zero pathway, which places increased energy efficiency at its centre, and prioritises the most vulnerable. Sadiq’s £43million Warmer Homes programme [5] is already in place so that eligible homes can be adequately insulated this winter.
However, the Mayor is clear that these efforts alone are not enough, and the Government must match the ambition and pace he’s showing from City Hall to protect Londoners from the cost of living crisis.
Mayor of London, Sadiq Khan, said:
“Many Londoners don’t know how they are going to keep warm this winter. Some don’t know how they will feed their children. This is a crisis and the Government needs to get serious. That is why I am calling on Ministers to convene Cobra, act on calls to stop energy bills from rising and for the introduction of an emergency Lifeline Tariff to ensure the most vulnerable Londoners are able to access basic energy use this winter. I am determined to deliver net zero in a way that helps Londoners manage these costs increases but I can’t do it alone.
“We’re now suffering the consequences of a decade of Government inaction on energy efficiency. The Government must match my pace and ambition and support plans like my own that would save lives this winter.”
Chief Executive of National Energy Action, Adam Scorer said: "The scale of the energy crisis in London is unprecedented and is going to hit the most vulnerable people hardest. The Mayor is right to challenge the UK Government to bring new ideas to the table so that people have the confidence to heat and power their homes this winter and don't fall prey to the terrible impacts if they can't".
Dan Paskins, Director of UK Impact, Save the Children UK on behalf of Warm this Winter Campaign said: "In a matter of weeks, many more parents are going to be facing impossible choices between eating or heating, yet we still do not yet have plan from the UK Government that recognises the urgency or scale of this energy price crisis.
“This winter will be bleak, but energy bills could stay high until 2030. This means we need more immediate emergency support to help those who need it this winter and coherent action from Government to rapidly move the UK away from volatile fossil fuels through a national programme of energy efficiency and the rapid expansion of clean energy, which is now four times cheaper than gas.”
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Notes to Editors
[1] Cornwall Insight has estimated the price cap to rise to £4,200 by January 2023
[2] The current English definition of fuel poverty – Low Income Low Energy Efficiency (LILEE) is relatively insensitive to changes in energy prices. Using the previous definition of fuel poverty (Low Income High Costs) and a methodology compiled by the End Fuel Poverty Coalition we estimate that for each 1% increase in fuel bills just over 6,000 London households fall into fuel poverty. At annual bills of £4,200 a year, we estimate 1.72 million London households would be in fuel poverty. With annual prices of £2,600 a year, 753,000 London households would be in fuel poverty.
[3] London’s total energy bill (i.e. gas, electricity and transport fuels) is estimated to be around £34bn for the coming year, based on the following projected average fuel prices for this winter (unit rates and standing charges are combined below):
· domestic gas price of 19p/kWh
· domestic electricity price of 66p/kWh
Implementing the Mayor’s “Accelerated Green” net zero pathway (as outlined here: /programmes-and-strategies/environment-and-climate-change/climate-change/zero-carbon-london/pathways-net-zero-carbon-2030) and assuming energy prices stay the same, on average, out to 2030, would see this annual fuel bill drop to below £26bn by 2030. Over the decade this would result in over £37 billion pounds in savings, if today’s fuel bill were to otherwise remain constant to 2030.
The Mayor’s Accelerated Green pathway would require, amongst other things:
· Nearly 40 per cent reduction in the total heat demand of our buildings, requiring over 2 million homes and a quarter of a million non-domestic buildings to become properly insulated
· 2.2 million heat pumps in operation in London by 2030
· 460,000 buildings connected to district heating networks by 2030
· A 27 per cent reduction in car vehicle km travelled by 2030
· Fossil fuel car and van sales ended by 2030 and enforced in line with Government’s existing commitments.
[4] Calculated from fuel poverty detailed tables 2022
[5] The Mayor’s Warmer Homes programme provides free heating, insulation and ventilation improvements for low income Londoners who own their own homes or rent privately. To find out more about the Warmer Homes programme click here