Response to DESNZ continuing the Warm Home Discount scheme consultation

National Energy Action welcomes the opportunity to respond to this consultation and strongly supports the Government’s proposal to continue the Warm Home Discount (WHD) for the next scheme period. The WHD remains one of the few direct measures to reduce energy bills for low-income and vulnerable households. Against a backdrop of persistently high energy prices, record levels of household energy debt, and ongoing affordability challenges, the scheme must evolve if it is to meet the moment.

This consultation builds on previous welcome reforms to reduce complexity and improve the accessibility of rebates within the WHD, including the expansion of eligibility in 2025/26 and the removal of the high-cost-to-heat threshold. It also provides an opportunity to standardise the scheme across GB and strengthen the scheme’s reach and impact.

Key recommendations

In summary, we strongly support the continuation of the Warm Home Discount scheme and urge the Government to use the flexibility offered in this consultation to deliver a more inclusive, responsive, and equitable mechanism. Our recommendations are grounded in evidence from delivery experience and engagement with households facing overlapping vulnerabilities.

1. Introduce a mandatory review of scheme breadth and depth

To ensure the flexibility proposed in this consultation delivers meaningful benefits for fuel-poor households, we recommend a formal review of the scheme’s breadth and depth in either 2026 or 2027. This review should assess the effectiveness of eligibility criteria, rebate levels, and delivery mechanisms in responding to changing affordability pressures, and should consider whether further use of the scheme’s built-in flexibility is needed to adapt support in light of emerging risks or inadequacies.

While we understand this consultation to be the primary opportunity for stakeholder engagement, we also urge DESNZ to commit to a structured annual review process, with clear opportunities for consumer groups and delivery partners to engage. This should include transparent reporting on scheme performance, distributional impacts, and emerging affordability challenges. Such a process would help ensure that rebate values continue to scale with need and that the scheme remains responsive over time.

2. Introduce tiered rebates calibrated to household need

In principle, the most effective way to support energy affordability would be through scalable unit rate discounts provided to all fuel-poor households and funded by progressive taxation. This would ensure that households facing the greatest hardship receive the most support, while avoiding regressive impacts on low-income consumers. However, given current fiscal constraints and the need for rapid, low-complexity reform, we believe a tiered rebate model offers the most pragmatic route forward.

We recommend replacing the current flat-rate £150 rebate with a tiered structure, such as £150, £250, and £400, to better reflect household need. Tiers should be calibrated using indicators including income, disability status, housing efficiency and heating type. This approach would allow support to be scaled appropriately and ensure that limited funding is allocated where it can have the greatest impact.

Rebate values should be reviewed annually to ensure they remain responsive to energy price trends and affordability pressures. This flexibility must be retained on an enduring basis within the scheme design and should be used to adapt support levels in line with changing conditions.

A tiered model has received broad support across stakeholders and was endorsed by the ESNZ Committee, which highlighted that “a tiered model targeting income and energy usage would have greater impact on tackling fuel poverty than increasing a flat-rate payment”. It also aligns with the wider consensus on the need for energy bill support to reflect overlapping vulnerabilities, rather than relying solely on benefit receipt.

This reform would retain the administrative simplicity of the current WHD model while delivering more targeted, equitable support to households facing the greatest energy hardship.

3. Expand eligibility beyond benefit receipt

The current WHD eligibility criteria exclude around one third of fuel-poor households who do not receive means-tested benefits. This includes disabled people, carers, single parents, and those in off-gas homes – groups who often face higher energy costs and acute affordability challenges but are locked out of support.

We recommend broadening eligibility to include all households in fuel poverty and those meeting vulnerability criteria. Improved targeting should draw on HMRC income data, EPC ratings, and health indicators. Automatic enrolment for these groups must be enabled through strengthened data-sharing legislation, building on the Digital Economy Act and existing precedents such as Ofgem’s Debt Relief Scheme.

4. Retain and strengthen Industry Initiatives

Industry Initiatives are a vital component of the Warm Home Discount scheme, providing tailored support to households who may not qualify for the core rebate. They have consistently delivered high-impact interventions such as emergency heating repairs, energy advice, benefit entitlement checks, and debt relief, often reaching vulnerable groups that other schemes miss.

We recommend strengthening this vital aspect of the WHD through reframing Industry Initiatives as outcome-driven interventions. Granular outcome reporting should be introduced to track metrics such as debt reduction, home improvements and health impacts mitigated.

Emergency boiler replacements should be retained, but with repair-first checks to ensure cost-effectiveness. Where replacements are considered, they should be limited to specific circumstances, for example, where a health condition or behavioural constraint necessitates maintaining higher indoor temperatures, which may be more reliably achieved with a gas boiler than alternative technologies.

5. Reform funding to make it progressive

The current Warm Home Discount funding model relies on a flat-rate levy applied to all energy consumers, which is inherently regressive and places a disproportionate burden on low-income households. This structure means that even households that do not receive the rebate still contribute to its cost through their bills.

We recommend exploring more progressive funding approaches, including:

• General taxation to support any expansion in the scope or value of the scheme.
• Income-based levy exemptions or tiering to reduce the burden on low-income consumers.
• Consumption-linked contributions, such as unit-based levies, to better reflect ability to pay.

General taxation could provide a fair and efficient route for funding additional support, particularly where the scheme is broadened to reach more households or deliver deeper rebates. However, exposing the full cost of the WHD to taxation is less realistic given fiscal constraints and the difficulty of securing long-term Treasury support.

Hybrid models may offer pragmatic alternatives that preserve targeting and limit regressive effects, without relying solely on public funding. What must be avoided is any further increase in regressive levies on low-income consumers.

6. Strengthen data-sharing to enable automatic enrolment

Automatic enrolment is essential to ensure that support reaches eligible households without requiring complex application processes. The ESNZ Committee found that inadequate data-sharing is one of the biggest barriers to effective delivery, increasing costs and reducing scheme efficiency.

We recommend legislating for secure data-sharing between DWP, HMRC, DESNZ and energy suppliers. This should build on the Digital Economy Act and Ofgem’s Debt Relief Scheme precedent. Data should be used to identify overlapping vulnerabilities and assign tiered support accordingly.

Governance, accuracy, redress mechanisms, and a phased roll-out will be critical to ensure public trust and effective delivery. The Committee recommended establishing an Energy Data Sharing Taskforce to deliver this by winter 2026–27.