Draft Warm Home Discount (England and Wales) Regulations 2026
(1 day, 6 hours ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Martin McCluskey)
I beg to move,
That the draft Warm Home Discount (England and Wales) Regulations 2026 be approved.
It is a pleasure to serve under your chairmanship, Mr Dowd. I should say to hon. Members that I have a terrible cold and I can barely hear at the moment, so if I do not answer any questions, it is not because I am avoiding them. The warm home discount scheme has been a key policy in the Government’s approach to tackling fuel poverty and reducing the energy costs of low-income and vulnerable households ever since its inception in 2011.
Linsey Farnsworth (Amber Valley) (Lab)
At a recent coffee morning that I held in the village of Holbrook, constituents raised their worries about energy bills. In 2024-25, 6,219 people, or 14.5% of all households in Amber Valley, received the warm home discount. Particularly in the light of ongoing uncertainty on household energy costs due to international events, I am really pleased that the Government are continuing to support the scheme and that I am a member of this Committee. Does the Minister agree that the Government should be focused on this issue absolutely?
Martin McCluskey
I know that my hon. Friend is a champion for her constituents in Holbrook and across her constituency. Like many hon. Members, she will have seen the increase in the numbers of people this year who are eligible for the warm home discount because of the decision made by the Government to expand the scheme to 6 million households. Her constituents and the constituents of all hon. Members will benefit from that this year.
Last year, the Government expanded the warm home discount scheme, removing the high cost-to-heat threshold to ensure that an additional 2.7 million of the poorest households across Great Britain received the £150 rebate off their energy bills this winter, with nearly 6 million households now eligible overall. The current scheme period ends on 31 March 2026, and new regulations are therefore required to continue the scheme beyond that date. In September, we consulted on continuing the warm home discount scheme up to and including the winter of 2030-31. The consultation respondents, including consumer advocacy groups, charities and industry, strongly supported proposals to continue the scheme and to continue providing rebates to vulnerable households via automatic data matching.
Today, we are discussing these regulations, as well as some additional changes to the scheme that will allow eligible households across England and Wales in or at risk of fuel poverty to continue to receive the rebate for the rest of this decade. Members will note that the regulations relate only to the scheme in England and Wales. The warm home discount scheme will also continue in Scotland to winter 2030-31 with £92 million a year of funding allocated. Fuel poverty is devolved in Scotland and, under these arrangements, the Scottish Government have determined eligibility for the next scheme period in Scotland within the funding envelope. Separate regulations have been laid in this Parliament to continue the scheme in Scotland, and I look forward to discussing these regulations with the House in due course.
George Freeman (Mid Norfolk) (Con)
What provision do these measures make for the disproportionate impact of fuel poverty in rural areas? Treasury figures show that cost of energy increases have disproportionately hit rural households, rural public services, rural charities and rural businesses, including in my Norfolk constituency. The risk of fuel poverty is 15% higher in rural areas. Do these regulations include any provision that tackles this traditionally overlooked injustice?
Martin McCluskey
I accept what the hon. Gentleman says about fuel poverty having a disproportionate impact in rural areas. The warm home discount applies equally, regardless of whether someone is in a rural area or an urban area, but the Government are taking other actions including through our warm homes plan, which has a particular focus on rural households, and rural retrofit to ensure that everyone is able to take advantage of it. Other areas of the Department’s work are focused on rural homes.
Turning to the detail of today’s statutory instrument, it will introduce the Warm Home Discount (England and Wales) Regulations 2026. These regulations will extend the scheme in England and Wales for five more years from 2026 until they expire in 2031. The regulations will continue to oblige energy suppliers with more than 1,000 domestic accounts to participate in the scheme. The regulations will ensure that, as is the case currently, energy suppliers with fewer than 1,000 domestic accounts can choose to participate voluntarily in the scheme.
Under the scheme, participating energy suppliers are obliged to provide support to eligible households through a rebate provided directly to their energy bill, valued at £150. Eligibility for the rebate will continue to be set out by the Secretary of State in an eligibility statement, which is published for each scheme year. Following the removal of the “high cost to heat” threshold and the expansion of the scheme in 2025-26, the Government are committed to maintaining the current eligibility for the rebate in England and Wales, based on receipt of means-tested benefits, for a further five years. Eligibility for the scheme remains unchanged, but the regulations introduce a more streamlined approach to administration, without impacting eligibility.
The existing core group 1 and core group 2 will be merged into one core group in England and Wales, with a view to enabling clearer communication and messaging to potentially eligible households. That change was broadly supported by consultation respondents. We put out a range of communications ahead of and during each scheme year to eligible households, and will continue to do so for the next scheme period. The automatic data matching process for the core group in England and Wales will continue, using data held and processed by the Department for Work and Pensions, with the majority of eligible households—typically around 96%—expected to be automatically data matched, meaning that they will receive the rebate without taking any action.
In addition, the regulations will continue to oblige scheme-supported energy suppliers to participate in the industry initiatives element of the scheme. Industry and consumer advocacy groups strongly supported its continuation in the consultation ahead of these regulations. The regulations set out a range of permitted activities overseen by Ofgem, through which energy suppliers can deliver towards their non-core obligations, supporting eligible households in fuel poverty or that are in a group at risk of fuel poverty. Permitted activities include benefit entitlement checks, energy efficiency measures, energy advice, debt relief and financial assistance payments of £150.
Scheme energy suppliers can also choose to dedicate non-core spend towards the park homes scheme, which I know is of interest to a number of Members, who have corresponded with me on the topic. It provides eligible households with £150 of support towards their energy bill. Industry initiatives provide vital support and are often delivered by the third-party partners of energy suppliers, including charities. The value of support available for industry initiatives will continue to be updated as under the current scheme period. The regulations will also introduce changes to the administration of the scheme and enhance consumer protections for eligible households.
The regulations also include a new provision that can enable the Secretary of State to direct suppliers to communicate directly with our own successfully data-matched customers to provide further information about the scheme, including information related to automated decision making. Where that provision is used, the Government would continue to notify households that are known as unmatched households, following the automatic data matching process, where additional information or evidence is required to determine their eligibility. Where a household is deemed unmatched, the Government will continue to notify them to contact the warm home discount helpline to determine their eligibility for that scheme year.
The regulations make provisions for a late rebate of £150 to be paid by a scheme supplier if the Secretary of State is satisfied that an eligible household did not receive a rebate in the preceding scheme year due to an administrative error by a scheme electricity supplier, the Secretary of State or Ofgem. In addition, the regulations will replace fixed spending targets with annual estimates based on the number of eligible households expected to benefit from a rebate each winter to predict more accurately scheme costs.
Tackling fuel poverty is a priority for the Government. We recognise that too many households cannot afford to heat their homes at a reasonable cost. That is why, in January, we published our new fuel poverty strategy alongside our warm homes plan, to ensure that many more fuel-poor households are protected by 2030. The continuation of the warm home discount scheme through these regulations will provide vital support for eligible households each winter, at the coldest time of year when support is most needed. I commend the draft regulations to the Committee.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
It is a pleasure to serve under your chairmanship, Mr Dowd. The regulations set out provisions for the continuation of the warm home discount scheme—fine. Last winter, 10 million British pensioners lost out on their winter fuel allowance as a direct result of decisions taken by this Labour Government. The only reason that number is not higher is that, as is now customary for this Government, they U-turned. The Government did so after pressure from the Conservative party and the general public, who made it clear in no uncertain terms that they were furious with the original decision to strip the payment from millions more. However, that U-turn came too late for many as over winter 2024-25 many pensioners were forced to choose between heating and eating. The original decision was not only unnecessary but not mentioned once by the Labour party during the general election campaign—and Labour Members have the gall to say that they worry about the cost of heating.
However, let us not forget the promise that was made during the general election—to reduce household energy bills by £300 per year. As it stands, those bills are £73 higher than when the Secretary of State took office after that election. The Labour party and the Government were warned multiple times by industry, academia, trade unions and us that the course they were charting would deliver not cheaper but dearer energy bills for British families and businesses. Energy generation in Great Britain is already some of the cleanest but, crucially, it is also the most expensive in the western world. The problem is that instead of taking unnecessary cost out of the system and making electricity cheap at source, the Government continue to pile cost after cost on to people’s bills, largely to pay for the Secretary of State’s net zero targets and his drive towards clean power 2030. Then they raise tax on everyone to cover the cost. That is exactly what the regulations do. The warm home discount is not paid for by energy suppliers or with free money; it is paid by everyone—all our constituents—through an extra tax on their energy bills.
Rather than cutting bills for everyone, as our cheap power plan would do, the Government are raising bills for everyone through higher taxes only to give a small proportion of households on benefits a discount. Our cheap power plan would cut everyone’s electricity bills by 20% immediately. We will not seek to divide the Committee, and will not stand in the way of the regulations moving forward, but we believe that the Government must take the steps necessary to meaningfully bring bills down, and not push them up further.
Pippa Heylings (South Cambridgeshire) (LD)
We agree that bringing down energy bills is a priority. It is especially necessary given the crisis in the middle east, which exposes families and small businesses once again to soaring fossil fuel prices, as seen in the spike in price for those who must use oil for heating, including in my constituency of South Cambridgeshire. The Liberal Democrats therefore agree with the extension of support through the warm home discount until 2031 to support those in fuel poverty. The Government should also consider other measures, such as tackling the growing energy debt, which is a spiralling crisis in this country, and creating a social energy tariff, for which the Liberal Democrats have long called. It is crucial to ensure that such support, including support from energy suppliers, is targeted to reach those who need it most.
Although the legislation before us updates some important data sharing provisions for the warm home discount, I urge the Minister to learn the lessons of the covid pandemic and the 2022 energy bill crisis and immediately enact a data sharing scheme between more Government Departments—not only DWP but the NHS and others—to determine eligibility. I also urge the Minister to devolve that scheme, where necessary, to local authorities to enable them to deliver targeted support to those who need it most. Meanwhile, we need to urgently decouple gas and electricity prices so that families and businesses feel the benefits of the clean energy transition and are not on the rollercoaster of volatile global energy prices.
We also call for a swifter roll-out of the warm homes plan. The cheapest form of energy is that which we do not use, and an effective insulation programme for struggling families across the country would bring down bills and lift households out of fuel poverty. The Government’s changes to the energy company obligation programme have meant that we have an effective delay of about 18 months to insulation programmes, which has put hundreds of small and medium-sized upgrade and retrofit companies at risk. The changes also potentially mean that this winter a Labour Government does not have an operational national fuel poverty strategy.
Martin McCluskey
I thank hon. Members for their contributions. On the points raised by the Opposition Front Bench spokesperson, in Q2 of this year energy bills will be lower than they were in 2024. He does not need to take that from me; he can see that in the research of the Resolution Foundation. He talks about expensive costs of energy. I agree that, in this country, we have some of the most expensive energy. That did not happen in the 18 months of a Labour Government, that has been building for a number of years, including during the period that he was in this role in the Department for Energy Security and Net Zero.
The only thing that seems to have changed with the hon. Gentleman over the last 18 months is that he has abandoned his commitment to clean power and net zero, which was well documented, not just in Hansard, but on his own website. We discussed that in the Chamber just a few months ago. His policy, which would see us turn away from clean power, is, bluntly, a road to ruin. We would expose people to further volatility in fuel prices and to the fact that we are already over-exposed to the price of gas. We would also continue to make ourselves reliant on energy supplies that are coming from petrostates. Over the last few weeks, we have seen the impact of being overly reliant on oil and gas supplies coming from overseas.
Lewis Cocking (Broxbourne) (Con)
If the Minister issued new oil and gas licences for the North sea we could produce more of our oil and gas here at home. That would mitigate some of the problems that he has just raised about being over-reliant on oil states.
Martin McCluskey
I am happy to be barracked under your chairmanship, Mr Dowd. Turning to the point that the hon. Member for Broxbourne raised, he knows that it would not matter if additional oil were extracted from the North Sea—it would not reduce the price of domestic energy in this country. It would not have any impact. If he has evidence to the contrary, I will be more than happy to take another intervention for him to demonstrate that energy prices would reduce if we extracted more oil from the North sea. No? Okay.
Moving on to the Liberal Democrat spokesperson, I thank her for the constructive tone of her speech. On the point around debt, Ofgem have consulted on a debt relief scheme, and more will be coming on that in the near future. On data sharing, I share her desire to ensure that there is far more data sharing. That is something that I have had discussions about, not just with the Department for Science, Innovation and Technology—and she may be aware of the kickstarter programme that is looking at how we can better share household income data—but with the Department for Health and Social Care too, specifically, around how we share data on vulnerability and health.
There are some really great examples at a local level. For example, Beat the Cold is an organisation in Stoke that is already sharing data between local NHS organisations and third sector organisations in order to reach the right people with vulnerability. The point for me is, if that can be achieved on a local level, we should be able to achieve something similar on a national level. The hon. Lady talks about cold, leaky homes, and that is obviously a focus of the Government’s £15 billion warm homes plan, which is investing in that area. I will gently say to her that, while we did cancel the ECO programme, that was because it failed and did not provide good value for money.
We have put an additional £1.5 billion into capital schemes through DESNZ, which will reach low-income people across the country. I point towards the announcement that was made by the Secretary of State on Sunday about the additional funding that will go into mayoral combined authorities, and elsewhere, for low-income schemes. That is from that £1.5 billion that resulted from the cancellation of ECO. On ECO, there were instances where, for example, about half of the cost was going into finding people to apply measures to, rather than actually applying measures, so from a value for money point of view, we needed to make sure that that worked far more effectively.
To sum up, we are committed to delivering the £150 warm home discount for at least another five years to support the households in England and Wales who need our help most. The regulations will deliver a warm home discount scheme that is more transparent and provides stronger consumer protection and greater clarity around eligibility. I commend the draft regulations to the Committee.
Question put and agreed to.