Up to two million households across Great Britain could miss out on £140 energy rebate each winter

For any queries related to this press release or to request an interview with report authors, please contact Peter Smith, Director of Policy and Research at National Energy Action (peter.smith@nea.org.uk or 07595 780 893) or Carl Packman, Head of Corporate Engagement at Fair By Design (c.packman@barrowcadbury.org.uk or 07889 836 298)

A new report released today warns a scheme which provides a payment of £140 towards energy bills – the Warm Home Discount (WHD) – could end in March 2021, despite it providing a lifeline to millions of pensioners across Great Britain. The authors also highlight that up to two million working age households across Great Britain could already be missing out on the energy rebate each winter, leading to difficulties keeping homes at a safe temperature.

National Energy Action (NEA) and Fair By Design (FBD) have teamed up to call for an extension and expansion of the scheme to ensure all eligible low income working age households receive the rebate automatically without needing to apply each year to their supplier.

Peter Smith, Director of Policy and Research at NEA commented:

“For nine years the Warm Home Discount scheme has been hugely successful in ensuring that the most vulnerable pensioners receive vital rebates automatically and are better able to afford to keep their homes adequately warm over winter.  It’s crucial this continues. Legislative powers were also passed in Parliament three years ago which allow the Government and suppliers to provide this support automatically to working age households too but up to two million Brits  are missing out on £140 energy rebates each year. This is despite them being eligible for support and paying for the cost of the policy through their energy bills”.

NEA and FBD say most poorer customers miss out each year because the Warm Home Discount is poorly advertised which means many are unaware of its existence. And even when customers are aware and apply, their applications can be unsuccessful because there is only a finite amount of money available for the limited annual budget. Smaller suppliers are also not required to provide the WHD meaning some customers switch suppliers in order to benefit from a cheaper deal but end up losing their entitlement to the £140 rebate making them worse off.

Carl Packman, Head of Corporate Engagement at Fair By Design said:

“Many low income households are already compelled to make a choice nobody should have to make: to heat or to eat.  At the same time many pay a poverty premium for the way they pay for household heat, which makes that desperate situation even worse.

“The Warm Home Discount is a lifeline for many struggling to heat their homes, to levels many of us take for granted. But there is a risk the scheme will end in March 2021.

“Putting £140 back in the pockets of millions of working age people will mean they pay a fair price for their energy. It mustn’t be underestimated just how valuable this measure will be.”

NEA and FBD are calling for Government to extend and expand the Warm Home Discount scheme for at least three years and ensure smaller suppliers are also required to provide the WHD. Current powers within the Digital Economy Act allow Government to ensure that all those eligible for the WHD rebate actually receive it without reducing benefits for low income pensioner recipients who are most risk of dying over winter.

WHD Industry Initiatives also fund the work of community and voluntary organisations to deliver assistance with debt and energy advice. Without a commitment to the extension of this element of the scheme NEA and FBD have warned that this work will cease.

NEA and FBD’s full briefing highlights how this can be achieved in a cost neutral way. Smith concludes:  “We hope the UK Government, Ofgem, parliamentarians, and energy companies work together  in 2020 to ensure that the scheme continues and expands after 2021”.

Ends  

Notes to editors

[1] National Energy Action works across England, Wales and Northern Ireland to ensure that everyone in the UK can afford to live in a warm, healthy home. NEA also provides the secretariat for the All-Party Parliamentary Fuel Poverty & Energy Efficiency Group (FPEEG) to raise awareness of fuel poverty and stimulate cross-party debate about the need to make energy costs more affordable.

[2] Fair By Design is a movement dedicated to reshaping essential services, like energy, credit and insurance, so they don’t cost more if you’re poor. Our Venture Fund provides capital to help grow new and scalable ventures to innovate the market. The Fair By Design Campaign launched in September 2018. We were established by Barrow Cadbury Trust, Big Society Capital, Comic Relief, Joseph Rowntree Foundation, the National Lottery Communities Fund, Social Tech Trust, and the Tudor Trust. The FBD Campaign is managed by Barrow Cadbury Trust on their behalf.

[3] The Warm Home Discount scheme provides a payment of £140 (inclusive of VAT) towards energy bills, and also contains provisions to carry out projects to help low-income and vulnerable households to better afford their energy bill. The scheme was introduced by the Government in April 2011 and is an obligation on energy suppliers funded through bills. Currently, there are two ways to qualify for the Warm Home Discount Scheme rebate:

  • Being a low-income pensioner in receipt of the Guaranteed Credit element of Pension Credit (known as the ‘Core Group’). This group receives the payment automatically and won’t need to apply to their supplier
  • Meeting an energy supplier’s criteria, based on means-tested benefits, of being in a low-income working age household (known as the ‘Broader Group’). This group applies for the scheme on the supplier’s own application process

A third element of the scheme allows suppliers to help fuel poor customers through third parties: this is known as the ‘Industry Initiative’. It can offer advice on energy saving, and help with reducing energy debts. Whilst the UK government co-ordinates data matching to find households who are eligible for a rebate through the Core Group, the energy regulator, Ofgem, administers the Broader Group and Industry Initiatives.

[4] The poverty premium describes the extra costs that households in poverty pay to access essential goods and services, such as insurance, household fuel, and credit. It is driven by three main factors:

  • the costs of particular payments preferences many low income households have which are often associated with constrained finances and the need for tight budgeting control (e.g. pay-as-you-go methods rather than Direct Debits)
  • the way that markets shape the choices available to consumers and impose certain costs on them (e.g. extra costs imposed on consumers who pose a potentially higher risk)
  • compounding factors related to consumer digital exclusion or living in a particular area.

[5] Over the last 5 years, there has been an average of 35,562 excess winter deaths each year across the UK. NEA estimates that approximately 30% of these are attributable to the impact cold homes have on those with respiratory and cardio-vascular diseases and the impact cold has on increasing trips and falls and in a small number of cases, direct hyperthermia. This is in line with estimates made by the world health organisation – http://www.euro.who.int/__data/assets/pdf_file/0003/142077/e95004.pdf 

[6] National Energy Action (NEA) and Fair By Design (FBD) are calling for the following:

• The UK Government to extend and expand the Warm Home Discount (WHD) scheme for at least three years

• The UK Government to ensure current low income pensioners continue to receive WHD rebates and ensure the extended and expanded scheme uses data matching powers to guarantee all eligible low income working age households receive the rebate automatically

• The UK Government to ensure smaller suppliers are also required to provide all elements of the WHD

• Ofgem to ensure the WHD is better designed i.e. ensure that more customers know about it and there are more channels to apply for it via Industry Initiatives

• For all energy suppliers to implement the new WHD policy before the start of the new phase of the scheme in April 2021, and regularly liaise with customers to see whether the WHD is meeting their needs

• For those suppliers to continue making sure consumers have access to hardship grants, and energy/fuel debt advice. Our full briefing, including costings and how our recommendations can be achieved, are found in an accompanying document found here: https://fairbydesign.com/news/whdcampaign/ 

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