Draft Warm Home Discount (Miscellaneous Amendments) Regulations 2018

Alan Whitehead Excerpts

Monday 9th July 2018 General Committees

[Dr Alan Whitehead (Southampton, Test) (Lab)]

It is a pleasure, Mr Bailey, to serve under your chairmanship this afternoon. You remarked earlier that I was slightly early for proceedings this afternoon; I ran all the way to get here early and I have just about recovered from my exertions, so that I can contribute to the debate. Also, I concur with the Minister that it is rather nice to be in slightly cooler surroundings, under present circumstances.

To put the Committee out of its misery straight away, I will say that we do not intend to oppose this affirmative statutory instrument today; on the contrary, broadly speaking we very much welcome it, because of the continuity it gives to the warm home discount over the next period and the extension that the statutory instrument provides for the annual warm home discount rounds. As the Minister said, we are up to round seven and this measure will provide rounds eight, nine and 10, in a confirmed way.

However, I have one or two questions that I would appreciate some clarification on from the Minister, in the context of that general support. The first question relates to the fact that although we are gathered today to approve this affirmative statutory instrument, we are doing so four months after the end of year seven, so we are confirming what will happen in year eight when it has already begun. The regulations indicate that people who are still receiving a warm home discount as if it were year seven—I assume there are such people—should be incorporated into year eight. I am not sure that is a satisfactory way to proceed, because the regulations should have been introduced before the end of year seven. There may be good reasons why that was not the case, but we are where we are.

Can the Minister confirm that people who are receiving a warm home discount under year seven will be incorporated into year eight? What effect will that have on the overall budget headings for the years ahead that the regulations set out? Will any anomalies arise in the year eight budgeting that would not have been the case if the transition from year seven to year eight had been carried out under the normal procedure?

The Minister set out the welcome news that considerations have not only been under way, but found their way on to a piece of paper, to reduce the obligation threshold for energy companies with liabilities to provide customers with access to a warm home discount package. As hon. Members will know, the present threshold for a company is 250,000 customers. We have seen some recent activity in the field of smaller energy companies—what used to be known as the insurgent energy companies, but are increasingly middle-sized—that are within the obligation, and of very young energy companies that are outside the obligation, some by quite a long way. There have been suggestions that some of those companies are demurring at the point of reaching 250,000 customers to retain their position outside those obligations.

Between 2019 and 2021, the obligation will be progressively reduced from 250,000 to 200,000 and then 150,000, which is still quite a large number. Although that is a welcome change, it will not resolve the problem of people who would be eligible for a warm home discount who may happen to switch from an obligated to an unobligated company without being aware of that, or perhaps as a result of a compulsory switch, as we have found on more than one occasion when energy companies effectively sell parts of their customer base to other energy companies, and who lose their entitlement to claim a warm home discount in the process.

If they find out that they have lost their warm home discount as a result of switching and try to re-switch, they find that because the warm home discount scheme is organised annually and there is a closing date for claiming it, they have lost the ability to reclaim their discount within the year of the scheme. Customers can be in a position where they have given up their warm home discount, tried to claim it again and found they are not eligible, so they do not have a warm home discount for the period. The reduction in eligibility not to provide the discount will help to some extent with that problem, but it will not completely resolve it.

As I am sure the Minister knows, several companies below the obligation level voluntarily take part in the warm home discount arrangements. I wonder whether she might consider taking some initiative either to encourage those companies that are below the obligation limit at least to take part in the obligation, or to work out some method for ensuring that those customers who have apparently given up the warm home discount, whether by accident or by force of transfer, can be placed back within the warm home discount one way or another while the process of reducing the obligation takes place. I would be interested to hear whether she has any thoughts in that particular direction.

A final, wider thought is that, while the Minister mentions the role of the warm home discount in the wider plan to ensure that as many homes as possible are as energy efficient as possible in the shortest time possible—indeed in the clean growth plan there is a suggestion that homes in the rented sector should be band C by 2030 and all homes should ideally be band C by 2035—the extension of the warm home discount, welcome though it is, just brings the discount period up to the ending of the renewable heat incentive and to only one year away from the conclusion of the energy company obligations. We have a number of measures relating to the aim the Minister set out of bringing homes up to scratch in energy efficiency; as she says, energy efficiency is by far the best way of fighting fuel poverty in the long term. We have three schemes that now have a cliff edge; in this instance, the scheme will be pushed back by several years, but nevertheless it is in the 2020s.

That is a long way away from getting anywhere near the targets that we need to get near and achieving that uprating of energy efficiency for properties across the board, fighting both the climate change concerns of inefficient homes and, as importantly, their fuel poverty implications. Can the Minister tell us anything this afternoon about the longer term plans she has to ensure that this and other schemes in the relatively near future will have a much longer timescale ahead of them, so that they can play a longer term part in fighting that campaign for fuel efficiency and against fuel poverty, and get us to those targets at the earliest time possible?