Thank you for contacting me about fuel poverty.
Launched in April 2011, the Warm Home Discount Scheme is a key Government strategy to tackle fuel poverty. It has helped over 2.2 million low-income and vulnerable households each year with energy costs. The scheme has been extended to provide £150 to three million vulnerable households. Around one million households on Pension Credit guarantee credit will receive a rebate each winter, and the majority will receive their rebate automatically, without the need to claim.
The Government has consulted on reforming the Warm Home Discount scheme. As announced in the Energy White Paper, the Government committed to better targeting fuel poverty and to provide the rebates automatically to households. The reforms include focusing support on households in receipt of qualifying means tested benefits and with high energy costs.
Disability benefits like the Disability Living Allowance (DLA) and Personal Independence Payment (PIP) are not means tested. As such, the incomes of DLA and PIP recipients tend to be higher than the incomes of those who will receive the reformed Warm Home Discount. The Government’s analysis shows that around 62 per cent of these people also receive a qualifying means-tested benefits and so would be considered low income under the new criteria. To introduce a disability or other non-means-tested benefits would mean that households on lower incomes and in deeper fuel poverty would lose out.
Due to the expansion and reform of the Warm Home Discount scheme, the Government estimated that 160,000 more households where someone has a disability or long-term illness will receive a rebate compared to the unreformed scheme. Current inflation is being driven by rising energy costs, provoked by surging demand after the pandemic as well as Russia’s invasion of Ukraine, which in turn has put pressures on living costs. The Government has already taken steps to help the lowest-income households through these extraordinary times: reducing the Universal Credit taper rate; increasing the National Living Wage; freezing fuel duty for the twelfth consecutive year; and launching a £500 million Household Support Fund.
Since Ofgem’s confirmation of the first price cap rise, the Government has put forward a three-part support package to help both lower and middle-income earners with the immediate adjustment. This includes a £400 grant for energy bills for all. Further, a non-repayable £150 cash rebate is being provided for homes in Council Tax bands A-D, equivalent to 80 per cent of all households and £144 million of discretionary funding for local authorities to support those not eligible for the council tax rebate. This means that hard working families will receive £550 with lower income families receiving even more help.
The Government is providing support with a £15 billion package to reach one third of households in the UK with £1,200 each. This includes £650 cost of living payment for every household on means-tested benefits, meaning over 8 million of the most vulnerable households will be directly sent a one-off cash payment. Moreover, a £300 pensioner cost of living payment will be given to every pensioner household in receipt of Winter Fuel Payment. Finally, for those in receipt of disability benefits, the Government is giving a £150 disability cost of living payment. The Government will continue providing this year’s cost of living payments and next year it will provide extra one-off payments of £900 for the 8 million households on means-tested benefits.
The Government has introduced an Energy Price Guarantee (EPG) which will give people certainty with their bills. The EPG now applies and will discount the unit cost for gas and electricity use. This guarantee, which includes the temporary suspension of green levies, limits the amount you can be charged per unit of gas or electricity. As you may be aware, the current price guarantee, set at £2,500, has been in place since 1 October and has meant that the Government has subsidised a significant amount of people's energy bills.
As you may be aware, this cap was due to end in April, however the Government is maintaining the EPG at £2,500 for the next three months until June 2023, which will save the average household £160 for this period. This measure will ensure that households are supported through Spring when energy costs are expected to remain high, and until the effects of reduced wholesale prices are expected to feed through into lower household bills later this year.
More broadly, the new Energy Security Strategy and correlating Bill outlines key plans to wean Britain off expensive fossil fuels which leave us exposed to volatile international prices we cannot control. New measures - from new nuclear to offshore wind - will boost our diverse sources of domestic energy, providing greater energy self-sufficiency and cheaper bills.
Consumer bills will be lower this decade than they otherwise would be as a result of the measures this Government has taken
Improving energy efficiency
Ministers are clear that one of the principal ways in which we can tackle fuel poverty in the long-term is to improve the energy efficiency of homes. To this end, I am glad that the Government is extending the VAT relief available for the installation of energy saving materials (ESMs). Moreover, this relief is also being increased further by introducing a time-limited zero rate for the installation of ESMs. A typical family having roof top solar panels installed will save more than £1,000 in total on installation, and then £300 annually on their energy bills. Further, the Government has set out its aspiration for as many homes as possible to be Energy Performance Certificate Band C by 2035, and to reach this standard by 2030 for fuel-poor homes.
Struggling households are eligible for insulation measures, including solid wall insulation, through the Energy Company Obligation (ECO) scheme. Homeowners and those in privately rented homes who are on specific benefits may also be eligible for support towards heating improvements, including oil-fired boiler replacements, through ECO Affordable Warmth. In addition, the Government is boosting funding for the Social Housing Decarbonisation Fund (investing a further £800 million over 2022/23 to 2024/25) and Home Upgrade Grant (investing a further £950 million over 2022/23 to 2024/25), which aim to improve the energy performance of low-income households’ homes, support low-carbon heat installations, help to reduce fuel poverty and build the green retrofitting sector to benefit all homeowners.
The Government is expanding this scheme which will focus on households which are low income and vulnerable, or at risk of fuel poverty, living in inefficient Energy Performance Certificate Band D-G homes, with a greater focus on insulation, making greater improvements to the least energy efficient homes.
There is more about the energy efficiency measures the Government is taking here.
Thank you again for taking the time to contact me.
Craig Whittaker MP