Baroness Bloomfield of Hinton Waldrist
Main Page: Baroness Bloomfield of Hinton Waldrist (Conservative - Life peer)Warm Home Discount (Miscellaneous Amendments) Regulations 2021
Baroness Bloomfield of Hinton Waldrist Excerpts
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, the House may be aware that in October 2020 the Government consulted on the proposed one-year extension of the warm home discount scheme. The changes proposed were broadly welcomed and it is the regulations implementing those changes that we are debating.
The Government are committed to alleviating fuel poverty. In the sustainable warmth strategy, published in February, the Government restated our commitment to our statutory target to upgrade as many fuel-poor homes as is reasonably practicable to an energy efficiency rating of at least band C by the end of 2030. The best long-term solution is to improve the energy efficiency of a home, bringing down the cost of heating it, but this takes time, and some, especially those that are harder to treat, may be left behind. As well as reaching millions of people each year, energy bill rebates are simple to deliver and consumer-friendly. The warm home discount is therefore a key policy in our policy mix to help alleviate fuel poverty.
Since 2011, the warm home discount has helped more than 2 million low-income and vulnerable households each year by reducing their energy bills at the time of year when it is most needed. Under the current scheme, around 1 million low-income pensioners in receipt of pension credit guarantee credit receive the £140 warm home discount as an automatic rebate on their energy bills and more than 1.2 million low-income and vulnerable households receive the rebate following an application to their participating energy supplier. Building on the success of the scheme, the energy White Paper committed to extending the scheme to at least 2025-26, expanding the overall spending envelope to £475 million per year from 2022, and consulting on reforms to improve the fuel poverty targeting rate. We intend to consult on the future scheme later this year.
Reforming the scheme has long lead-in times, however, and this winter we want to prioritise the safe and timely delivery of rebates to ensure that those in need continue to receive this vital support, particularly given the continuing impacts of Covid-19. It is therefore important that minimal changes are made to the scheme for next winter. This will mean that the scheme will be worth £354 million and that eligible pensioners on pension credit guarantee credit, as well as eligible vulnerable households supported through the broader group, can continue to receive a £140 reduction on their energy bills.
We will also not be amending the current energy supplier participation thresholds, as any change now, with such limited time for implementation, could cause significant, and potentially damaging, administrative and financial challenges for smaller energy suppliers. We intend to review this for the future reform. We are, however, making some improvements to the industry initiatives part of the scheme. This includes lifting the restriction on providing financial assistance under industry initiatives to those eligible for a rebate, which will create greater flexibility and help more people during the Covid-19 pandemic. We will keep the current overall cap of £6 million for the energy debt write-off mechanism, but we will also introduce a new individual cap of £2,000, enabling support to reach a greater number of households in need.
We will also be making changes so that proposed industry initiatives and specified activities will ensure—so far as reasonably practicable—that advice on the benefits of smart meters is provided to households benefiting from the industry initiative or specified activity. During the Covid-19 pandemic, smart meters have been invaluable for energy consumers, allowing prepayment customers to top up remotely from home, while also enabling suppliers to offer timely support to vulnerable consumers. We are also introducing greater consumer protections for boiler and central heating system installations and repairs carried out under the scheme.
Finally, we are proposing to make some further operational changes this year. This includes introducing a requirement for the Gas and Electricity Markets Authority to inform the Secretary of State if an electricity supplier which becomes a supplier of last resort notifies the authority of its intention to meet all or part of a failed supplier’s non-core spending obligation. This additionally includes making changes to clarify the full extent of a smaller supplier’s scheme obligations when it passes the relevant threshold and becomes newly subject to the non-core spending obligation.
In conclusion, the regulations extend the warm home discount until March 2022, which will help more than 2.2 million households next winter. These regulations will provide vital support for low-income and vulnerable customers to keep warm, in advance of consulting on wider scheme reform from 2022. I commend these regulations to the Committee.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I thank all noble Lords for their valuable contributions to this debate, particularly coming from people whom, I know, have long been interested in this subject and have a greater degree of knowledge than often happens in these short debates.
The points made show the importance of extending the warm home discount scheme for a further year. The financial pressures that Covid-19 has imposed on households across the country has been challenging, particularly for low-income and vulnerable households. Extending the warm home discount will provide much-needed support for households in or at risk of fuel poverty, particularly during the pandemic. I am therefore pleased that there is agreement across this Committee that low-income and vulnerable households should continue to receive the valuable support provided by the warm home discount at the time when they need it most.
Over the 10 years of the discount scheme, more than £3 billion in direct assistance has been provided to low-income and vulnerable households. These regulations will enable the continuation of this support for another winter. This means that more than 1 million of the poorest pensioners and a further 1.2 million households in or at risk of fuel poverty will continue to receive £140 off their energy bills.
The regulations also allow for the continuation of a wide range of industry initiatives, including debt write-off, financial assistance and energy efficiency measures. These initiatives will be enhanced by the changes I have outlined, ensuring that we can better support households in need.
As outlined in the energy White Paper, we are committed to extending the scheme beyond this extension, from 2022 until at least 2025-26, expanding the spending envelope to £475 million to enable us to reach a further 750,000 households. We are also consulting on reform of the scheme to target fuel poverty better. This may be where the difference in numbers came from—the scheme has expanded from next year. We intend to consult later this year on the future scheme beyond 2022.
I pay tribute to the long-standing commitment of my noble friend Lady McIntosh of Pickering to this whole area of alleviating fuel poverty. I am very grateful for her support. She asked for confirmation of the industry initiatives—they are of significant value—and whether they will be continued or expanded under the reformed scheme. We recognise the value of industry initiatives, which is why we have expanded their potential use over time. We will consult on reforms later this year; that will include proposals on industry initiatives.
In response to my noble friend’s question about the future for vulnerable customers in relation to the new fuel poverty metric, we intend to reform the scheme to target those most likely to be in fuel poverty while continuing to protect the most vulnerable current recipients. Our proposals, which we are still finalising, will include options to mitigate the impact on households that may be disadvantaged by those reforms. My noble friend also asked about the rebate contributing to the Government’s fuel poverty and energy efficiency targets. We are increasing energy efficiency support for fuel-poor homes through the future expansion of the energy company obligation, as well as through recently introduced funding through local authority delivery.
We recognise that energy efficiency is the best long-term method of tackling fuel poverty, which is why in the past year we have increased government investment to make homes more energy efficient and committed to extending and expanding the energy company obligation. We should also recognise, however, that reducing bills through the warm home discount will continue to be a crucial tool in reducing fuel poverty until all homes reach the required energy efficiency standard. I know that this point was of particular concern to the noble Lord, Lord Oates. In response to his question on the timing of the regulations, they have not come into force; the rebates will be paid only from autumn this year, as is always the case. We have said that, if and when these regulations come into force, any industry initiatives that have already been funded from 1 April 2021 and are subsequently approved will count towards suppliers’ obligations.
On the noble Lord’s question on the supplier of last resort process, the Office of Gas and Electricity Markets already has in place a process that ensures that customers have continuity of energy supply when an energy supplier fails. The competitive process is run by Ofgem and allows for the orderly transfer of the failing energy supplier’s customers to a different energy supplier. Warm home discount obligations are placed on the electricity supply licence and, when a supplier fails, it does not transfer to the new supplier. However, the warm home discount is taken into consideration when Ofgem appoints a supplier of last resort. In previous scheme years, suppliers of last resort who were themselves warm home discount participants have chosen voluntarily to honour the obligations to pay rebates of the failing energy supplier. This information requirement is intended to facilitate the potential to permit any notifying suppliers of last resort to deduct extra non-core overspend from their non-core spending obligation in future scheme years, which in turn would incentivise suppliers of last resort to take on the non-core spending obligations of failed suppliers voluntarily.
The noble Lord also asked about the funding of the scheme. Suppliers reducing their customers’ bills directly is a more effective way of tackling fuel poverty than increasing incomes because consumers are more likely to use the money to pay their energy bills. The same amount of money reduces energy bills by a greater proportion than it increases income. We also believe that it is more likely to result in households using more energy to keep warm in winter and reduces the risk of them rationing how much they heat their homes or self-disconnecting entirely.
In response to the noble Lord’s question on the EPC ratings of homes that have received the warm home discount, I am afraid that we do not have the data he requires. He also spoke in general terms about the Government’s ambitions on increasing the efficiency of homes and their heating. On this point, I should say that the heat and building strategy will be published imminently, setting out how we intend to meet our commitments and setting us on a path to decarbonising homes and buildings by 2050. When I say “imminently”, I know it is disappointing that we have not got it out already, but it is due to be published soon.
I suggest that I write to the noble Lord, Lord Grantchester, on the details of writing off bad debt as I do not have that data in my briefing pack or to hand. In response to his question on the supplier of last resort process, the obligation is tied to the supplier’s licence but, thus far, the new suppliers have voluntarily taken on these obligations.
In response to the noble Lord’s question on TrustMark, we are introducing new requirements for the installation and repair of boilers and central heating under industry initiatives. They are to be delivered by TrustMark-registered installers and lodged in TrustMark’s data warehouse. This will provide greater consumer protection for households. The cost for a company to register under TrustMark is minimal. TrustMark also has a fee for installers to lodge measures in their data warehouse. As with other government schemes, the fee is £30, which covers the costs associated with providing technical monitoring and quality assurance. Requiring TrustMark registration will ensure that boilers and central heating systems installed under the scheme are delivered to a high standard, providing households with security and a longer-term solution. The introduction of these standards is particularly beneficial for those who are particularly vulnerable to cold, such as individuals with a health condition.
On the noble Lord’s question about consumer costs, the expansion from 2022 is expected to add £5 to the average annual dual fuel bill, taking the total to £19 per annum.
The noble Lord asked about the definition of fuel poverty in Scotland. Fuel poverty is devolved and it is up to Scottish Ministers to set their definition of fuel poverty and targets. We believe that our definition is best suited to measuring the problem and progress against it in England. In the next scheme year, we expect around 2.2 million rebates to be provided.
The noble Lord also asked about the contribution of measures to eliminating fuel poverty by 2035. Our target is to improve as many fuel-poor homes as is reasonably practical to an energy efficiency rating of Band C by 2030. I can also confirm that we will publish our consultation on the future of the scheme soon. We will consult on the future of industry initiatives as part of this but, as I have already said, we value industry initiatives.
I think I missed out the green homes grant and local authority delivery. Last summer, the Chancellor announced an investment of up to £3 billion in decarbonising buildings, including investments towards the £9.2 billion of funding set out in our manifesto. We have made excellent progress across much of this investment, with substantial sums being invested in social housing, schools and hospitals as well as in homes through the green homes grant voucher scheme, particularly in partnership with local authorities and supporting local green jobs. I think the noble Lord, Lord Oates, asked about this.
I think that that completes the debate. I commend the regulations to the Committee.