Draft Warm Home Discount (Scotland) Regulations 2022

(Limited Text - Ministerial Extracts only)

Wednesday 7th September 2022 General Committees

[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

I beg to move,

That the Committee has considered the draft Warm Home Discount (Scotland) Regulations 2022.

I welcome you to the Chair, Mr Efford. It is a pleasure to serve under your chairmanship.

The draft regulations were laid before the House on 29 June 2022. We have already passed legislation for the warm home discount scheme in England and Wales. The Scottish Government have devolved powers under the Scotland Act 2016 to design and implement a warm home discount in Scotland, while the Secretary of State for Business, Energy and Industrial Strategy reserves certain powers. Earlier this year, Scottish Ministers requested that the UK Government make provision for a continuation of the scheme in Scotland. In May, the UK Government consulted on such proposals, which were supported by most respondents.

This draft statutory instrument extends and expands the warm home discount scheme in Scotland until March 2026. The scheme will be worth about £49 million per annum in Scotland, an increase of some £13 million. About 280,000 vulnerable Scottish households will receive a rebate, which is 50,000 more than last winter. The apportionment of spending to Scotland—9.4% of the total—is based on the number of domestic gas and electricity meters across Great Britain. The proportion of spending in Scotland will exceed Scotland’s share of the population.

The scheme participation threshold for energy suppliers is lowered to 50,000 domestic consumer customer accounts in 2022-23 and to 1,000 from 2023-24. As requested by Scottish Government Ministers, the scheme will largely be a continuation of what was in place previously.

Under the core group, about 90,000 pensioners in receipt of pension credit guarantee credit will continue to receive their rebate automatically. Under the broader group, about 190,000 low-income and vulnerable households will receive a rebate following an application to their energy supplier.

[Nick Smith (Blaenau Gwent) (Lab)]

I wonder whether the Minister would help me. The explanatory notes state that the

“process requires data matching activities by DWP which can only take place once the instrument is in force and takes several weeks before suppliers can start to provide the rebates.”

This could be a complex process, so has he got an estimate for when the rebates will be applied, please?

--- Later in debate ---

[Greg Hands]

I thank the hon. Gentleman for that intervention. This aspect of the scheme is, I believe, unchanged. The experience of the scheme over some years, since its introduction about 10 years ago, has been very satisfactory in that regard. I am not aware of a wide range of problems with that matching exercise leading to a delay in payments. The answer is that the payments will be able to be made from November, at the finishing of the matching exercise, which I do not believe is fundamentally different from previous years.

Each energy supplier’s obligations under the scheme will be set according to their market share in Great Britain to ensure a fair spread of the cost. The Government recognise that there are differences in the proportion of customers that each energy has in the different Great British nations. To make allowance for that, suppliers with few broader group customers in Scotland may transfer up to 100% of their broader group target to industry initiatives, subject to Ofgem’s approval. Such approval will mainly be based on each supplier’s market share in Scotland relative to Great Britain as a whole. Only energy suppliers with a disproportionately low number of Scottish customers are likely to be permitted that flexibility.

Industry initiatives, which are an established part of the scheme going back some years, include provision of energy advice, benefit entitlement checks, financial assistance and energy efficiency measures. The cap on spending will increase to £7 million per annum, broadly proportionate to the spending expected in England and Wales in 2025-26. No caps have been imposed on financial assistance spending. Suppliers whose broader groups are oversubscribed will be able to direct customers to that form of help.

The warm home discount remains a source of critical support for low-income households across Great Britain. This year, it will complement other large-scale support that the Government are providing on energy and the cost of living totalling, to date, £37 billion. The regulations ensure that more help is provided in Scotland for at least the next four winters, and show the UK Government’s commitment to the most vulnerable in Scotland, with both a 36% increase in spending and a 22% increase in the coverage of vulnerable households. I therefore commend the regulations to the Committee.

--- Later in debate ---

[Greg Hands]

I thank the members of the Committee who have made some fair points in support of the scheme. If I hear it correctly, the scheme has support right the way across the Committee, which is very welcome. Let me deal with some of the points that arose in the debate.

The hon. Member for Southampton, Test always lives up to the name of his constituency, with a set of testing questions. First, are the Scottish Government happy with the proposal? Yes, we have shared and agreed the proposals in the consultation and in this SI. He rightly asked about the reconciliation regulations; I know that he reads these things assiduously, as a good Opposition spokesman should. The reconciliation regulations are being prepared and the process will run to the same timetable as in previous years.

The hon. Gentleman asked why there are differences between England and Wales and Scotland, and I will come back to that in response to the hon. Member for Paisley and Renfrewshire South. The warm home discount scheme overall is devolved, but there are reserved aspects within it. The main reason why there are differences is the difference in the databases. The reforms that have been carried out in England and Wales this year, which we debated as part of an SI in the spring, could not be implemented in Scotland in the same way. That is because the Valuation Office Agency holds data on all households in England and Wales but not in Scotland, where the data is held by local assessors. Therefore, we have a fair amount of the overall annual funding for the warm home discount scheme in Scotland and we are implementing a continuation of the current scheme, as specifically requested by Scottish Government Ministers.

The hon. Member for Paisley and Renfrewshire South is not right to say that the warm home discount scheme is reserved. A couple of aspects of it are reserved, including approving any scheme for Scotland; she is right in that sense. However, I remember the design of the scheme during the negotiation that I did with John Swinney in 2015-16, and the Scotland Act shows that it is clearly a devolved aspect. However, in relation to setting the value of the rebates and setting the supplier participation threshold, because the energy market is essentially a Great Britain-wide market we have to make sure that certain aspects of the scheme have some common characteristics for those who are supplying energy in Scotland, England and Wales. That is why the supplier participation threshold is a reserved aspect.

On fuel poverty, I invite the hon. Lady to have a word with the Scottish Government, because she knows that fuel poverty is devolved. There are different ways of calculating fuel poverty in Scotland. If she has a particular problem with fuel poverty data in Scotland she may be better connected to the Scottish Government than I am, and she may feel better placed to make that representation to the SNP-led Government in Edinburgh.

[Mhairi Black]

Would the Minister accept that the idea of fuel poverty in Scotland is itself ridiculous, given that Scotland provides more energy for the whole of the UK than anywhere else does?

[Greg Hands]

The hon. Lady tempts me to go down the road of a wider debate. I am always happy to take on the SNP in any forum, but I point out the big advantages that we have with the Great Britain-wide electricity and energy market: the degree of depth and breadth, not forgetting that a huge amount of our new energy is being supplied not just off the coast of Scotland, but from England and the Celtic sea; our nuclear capabilities; and all of the things that bring a Great Britain-wide approach to energy.

Although energy efficiency measures provide long-term assistance in reducing energy bills—we recently increased the size of the Great Britain-wide energy company obligation scheme to over £1 billion per annum—there remains a clear need for direct financial support now. The Government have implemented the largest expansion of the warm home discount scheme across Great Britain since it began in 2011. In 2021-22, the spending envelope was worth £354 million. In 2022-23, that is rising to £523 million. In Scotland, that will ensure that 280,000 low-income and vulnerable households receive a rebate on their energy bill each winter until at least 2026. The Government remain committed to helping low-income and vulnerable households right across Great Britain with heating their homes. That is demonstrated by the Government’s support of over £37 billion with energy bills and the cost of living this year to date, and today by the extension and expansion of the warm home discount in Scotland. Therefore, I ask that the Committee approve the regulations.

Question put and agreed to.