The Great British heat annuity

'Heat or eat' is back, and No.10's answer is a block tariff. Something bolder: Great British Energy installs the heat pump against the value of the home — and guarantees warmth for life.

"Heat or eat" is back. Gas is war-priced again — the July cap rose 13% to £1,862 with the resumption of hostilities in the Middle East priced into every therm, and when Ofgem announces the October cap next week, forecasters expect a third consecutive rise. The grim arithmetic of the last crisis is returning with it: among prepay customers at one large supplier, Oxford researchers found nearly two-thirds self-disconnecting at least once a year. Not switching tariff. Turning the heating off and going without, because the money was needed for food.

A new government is under pressure to answer that, fast, and without rerunning 2022's blank cheque. The answer currently on No.10's desk is a block tariff — a cheap first slice of energy for everyone, dearer units above it — pushed by the New Economics Foundation and the Joseph Rowntree Foundation, and with friends in high places: the Energy Secretary used to run NEF. Against it, the Centre for Net Zero published a piece last week titled "The wrong kind of radical," arguing block tariffs break price signals, punish electrification and mistarget the poor. (The Resolution Foundation, usually filed on the "pro" side, actually wants neither — their proposal is an income-targeted social tariff, a different animal.)

I think both camps are right about each other and wrong about the question.