The statement made by Greg Hands, the Minister for Energy, Clean Growth and Climate Change, in the House of Commons on 12 May 2022.
Upgrading our homes to be more energy efficient is the best long-term solution for reducing our energy costs and keeping ourselves warm in winter. However, this takes time, which is why the warm home discount remains a key policy for tackling fuel poverty now. For 11 years, the warm home discount has provided vital help with energy bills to households on the lowest incomes. Last summer, the Government consulted on the future of the warm home discount scheme in England and Wales, and today, the Government have laid the regulations for extending, expanding, and reforming the scheme to 2026.
From this winter, the Government are expanding the warm home discount scheme. The annual spending envelopes will increase from around £350 million to £475 million (in 2020 prices), and the value of the household rebates will rise from £140 to £150. As a result, around 2.8 million households in England and Wales will receive a rebate every year, 750,000 more compared to the previous scheme. We are also lowering the energy supplier participation thresholds from 150,000 domestic customer accounts to 50,000 in 2022-23 and 1,000 in 2023-24, meaning that almost all customers will be with a participating supplier and thereby reducing the barriers for people switching energy suppliers.
Under the scheme, around 1 million low-income pensioners will continue to receive their rebates automatically through the core group 1 element of the scheme. It is right that we protect this low-income vulnerable group susceptible to the effects of living in a cold home.
From this winter, the Government are replacing the former application-based broader group element, under which low-income and vulnerable households had to apply to their energy supplier every year. Broader group rebates have often been awarded on a first-come, first-served basis or by lottery, as there have been more eligible households than there were rebates available.
Instead, around 1.9 million households will receive rebates under a new core group 2. These households will be those on the lowest incomes and with high-energy costs, determined by using data on property characteristics. Through data-matching between Government Departments and energy suppliers, the vast majority of these households will be identified automatically and receive their rebate without having to take any action. These reforms will improve the fuel poverty targeting of the scheme, ensuring more of the rebates go to households in, or at risk of, fuel poverty.
Lastly, the Government recognise the value of industry initiatives, taking the form of additional financial and energy-related support measures, that energy suppliers and industry partners provide to fuel poor households. It will therefore become mandatory for all energy suppliers participating in the scheme to provide or fund industry initiatives.
The Government are consulting on a warm home discount scheme in Scotland for the period until 2026 and shall lay separate regulations, subject to the outcome of that consultation.
This expansion of the warm home discount scheme forms part of the wider support to help households with rising energy bills. The Government have announced £9.1 billion of support through the energy bills rebate in 2022-23. This includes: a £200 discount on energy bills this autumn for domestic electricity customers in Great Britain; a £150 non-repayable council tax rebate for households in England in council tax bands A to D; and a £144 million discretionary fund to support households not eligible for the council tax rebate. Meanwhile, the devolved Administrations will receive around £565 million corresponding funding through the Barnett formula.
More information on the warm home discount scheme will be made available over the summer on www.gov.uk/the-warm-home-discount-scheme.