Recommendation 2

HM Government Accepted

The Warm Home Discount scheme is a key policy in the Government’s approach to tackling fuel poverty and reducing the energy costs of fuel-poor households. The Government has extended the scheme to 2025/26, expanded the scheme with the aim of supporting up to one million more households, and increased the value of the rebate to £150 for fuel-poor households across Great Britain. Following a public consultation in summer 2021, the Government also reformed the scheme in England and Wales from winter 2022 onwards to provide more rebates automatically, better target households in fuel poverty and remove any “first come first served aspect”. There is a separate Warm Home Discount scheme in Scotland, where these reforms were not possible due to differences in the way Government holds data on properties. The reformed scheme in England and Wales prioritises low-income households living in properties assessed to be relatively high cost to heat based on the property characteristics. This is done by applying an algorithm to the type, age, and floor area of the property to identify low-income households living in properties with a high energy cost score. Broadly speaking, older, larger, and more detached properties have higher heating costs. As a result of these reforms, we estimate that around 560,000 more fuel poor households should receive a rebate, including around 160,000 more households with a person who is disabled or has a long-term illness. In addition, it is assessed that the proportion of rebates received by households with a disability or long-term illness will remain higher than the proportion of the fuel poor population with a disability and higher than the proportion of the overall population with a disability. Through data matching between Government departments and energy suppliers, most beneficiaries receive their rebates automatically. All households who meet the eligibility criteria then receive a rebate. The official statistics for the 2022/23 scheme year show that last winter, 95% of recipient households received their rebates this way, with the remaining 5% receiving their rebate following a claim to the Warm Home Discount helpline. Participating energy suppliers fund the scheme, through domestic energy consumers bills. All suppliers, except for the very smallest, must participate. The Government has therefore set the scheme’s spending envelope to balance providing as many households in fuel poverty as possible with meaningful support with their energy bills, whilst keeping the overall costs to consumers manageable. We expect over three million households to receive a Warm Home Discount rebate this winter and the Government continues to explore options to make the WHD more flexible.