Warm Home Discount (Miscellaneous Amendments) Regulations 2018

Baroness Featherstone Excerpts

Thursday 19th July 2018 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, these regulations extend the warm home discount scheme until 2020-21, ensuring over 2 million low-income and vulnerable customers receive a £140 rebate on their energy bills in winter, when they need it most. This is vital support and a key policy for tackling fuel poverty.

The best long-term solution to alleviating fuel poverty is to improve the energy efficiency of a home, bringing down the cost of heating it. The Government are committed to tackling fuel poverty and improving energy efficiency. We have launched a number of interventions to help us achieve this. In the Clean Growth Strategy, we stated the aim to upgrade all fuel-poor homes to band C by 2030. In March, we consulted on focusing all of the energy company obligation funding—£640 million per year—on low-income and vulnerable households. We have committed to the continuation of funding for domestic energy efficiency until 2028, at least at current levels—an investment of £6 billion over the next 10 years—and we have consulted on proposals to strengthen the existing minimum standard regulations in England and Wales so that private landlords make improvements to F and G-rated homes before letting them. This is part of our wider, long-term aspiration to improve as many homes as possible to band C by 2035.

The energy efficiency improvement of homes takes time, however, and some properties, especially those that are harder to treat, may be left behind. Energy bill rebates through the warm home discount, therefore, continue to play an important role. Through the Domestic Gas and Electricity (Tariff Cap) Bill, which I hope will receive Royal Assent in due course, we are taking action to protect 11 million households currently on the highest energy tariffs. Under the warm home discount, around 1.2 million low-income pensioners in receipt of pension credit guarantee credit receive £140 as an automatic rebate on their energy bills. Over 1 million low-income and vulnerable households receive the rebate following an application to a participating energy supplier. In recognition of the success of the scheme, the 2015 spending review committed £320 million per year to the scheme— rising with inflation—until 2020-21. The current regulations underpinning this scheme expired in April and the regulations in front of us today extend the scheme until 2020-21. This extension to the regulations will not inhibit the reform of the scheme in future. We intend to consult later this year on a number of changes from 2019-20, including expanding the successful data-matching process and so removing the need for consumers to apply. We will want to look at ways in which we can achieve the most effective targeting of the scheme by making the best possible use of the data available to us. To do this, we needed primary legislation, and I am delighted that the data-sharing powers we needed under the Digital Economy Act 2017 are expected to come into force before Summer Recess.

Meanwhile, the regulations we are debating today introduce a key change to the scheme. More energy suppliers will be required to offer the warm home discount to their customers. We will give smaller suppliers enough time to put the right processes in place, while giving a clear signal to the market. So, the threshold will reduce gradually, from 250,000 down to 150,000 customer accounts between 2019 and 2021. The impact of the threshold will be reviewed and, should the scheme continue beyond 2021, we expect it to be reduced further.

It is important to note that these regulations do not make significant changes to the scheme eligibility for this coming winter. This winter we want to prioritise the safe and timely delivery of the rebates. That will mean that all eligible pensioners on pension credit guarantee credit will continue to receive £140 off their bills. These regulations make only small changes to eligibility for the broader group—the part of the scheme for which customers have to apply—by including universal credit recipients who are in work with low earnings, and to reflect welfare changes.

We believe there is more room for more innovative, industry-led projects to identify fuel-poor households and to provide the most suitable package of advice and measures. Recognising this potential, we are increasing the spending cap on industry initiatives from £30 million to £40 million. We are also expanding the list of activities allowed under industry initiatives to include the provision of financial assistance with energy bills for households not eligible under the core group or broader group. This could be households not on the benefits system but particularly at risk of fuel poverty, including those where someone has a long-term illness or disability. This will be limited to up to £5 million overall and up to £140 per household—equivalent to the value of the rebate.

We want to ensure that industry initiatives funding focuses on support to reduce bills for the long term, such as through energy advice and energy debt assistance. These regulations will continue to reduce the cap on the spending allowed on debt write-off from £12 million to £10 million—or 25% of the increased cap—and to continue to reduce it in future years, to £8 million in 2019-20 and £6 million in 2020-21.

In conclusion, the regulations extend the warm home discount until 2020-21. These affirmative regulations provide vital support for low-income and vulnerable customers to keep warm for the next three winters. The changes that we propose to make will mean that more suppliers will be required to provide assistance to their eligible low-income customers, and that suppliers can spend more on industry initiatives to provide innovative and long-term energy bill support to households in need. I commend these regulations to the House and beg to move.

[Baroness Featherstone (LD)]

My Lords, obviously, we welcome the extension of the warm home discount, which has been successful. It has been in operation for seven years, and it benefits those in fuel poverty, so a further three years is welcome.

I noticed what the Minister said about energy efficiency. We on this side could not agree more that energy efficiency is massively important, and we welcome all and any measures the Government might take. However, we also encourage the Government to reintroduce the zero-carbon homes standards. When you have the opportunity to build new homes, it seems a pity not to reduce the need for heating and expense in that way. Two million low-income and vulnerable households have benefited, and the main elements remain in place and intact. I do not know how widely this consultation is marketed, as there were only nine individuals out of a total of 60 respondents. While the changes are not earth-shattering, that is a very small number for an issue that affects every household in the country.

I was pleased to see that the Government took notice of the concerns, and although they have agreed to reduce the threshold for suppliers, in the end all suppliers should be able to offer it or should offer it. At the moment, people are having to choose between keeping the warm home discount and saving by switching, and it seems that people would rather keep the warm home discount, even though savings might be larger than £140 by not doing so. However, we welcome these regulations.