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Warm Home Discount

Volume 578: debated on Tuesday 25 March 2014

It is a great pleasure to serve under your chairmanship, Sir Edward. I am pleased to have secured this debate about the warm home discount. Along with the energy company obligation, the warm home discount is a key tool for tackling fuel poverty.

The Government have a good track record in bearing down on heating bills. According to the House of Commons Library—I am grateful for the note that it has prepared for the debate—the Government are doing much more than the previous Labour Government to help people in fuel poverty. Although considerable effort has been made to keep heating bills down this winter, with particular help for pensioners and other groups of vulnerable people and with an estimated 2 million homes receiving the warm home discount, we must do more to stop people of all ages living in cold homes.

There is a particular group of people whom we must do more to help. Across Great Britain, off-mains-gas customers make up at least 11% of the total population, but that proportion varies wildly by region. Just under half of all homes in Cornwall are off the mains gas system, and a much greater proportion than the national average lives in detached homes, which, as we all know, are difficult to insulate. Dual fuel deals offer the best value, but they are just not available to off-mains-gas homes. The alternatives—bottled gas, oil, biomass or electricity—all cost much more than mains gas. The Government are to be applauded for setting up a ministerial working group to find new ways of supporting off-mains-gas households. It is already making some really positive differences. I apologise for my croaky delivery; I am trying to fend off a cold.

There is a wide range of measures that we can all take to save money heating our homes. It is important to ensure that people know about the help that is available, such as energy-efficiency measures, oil-buying clubs and cash benefits, but that is sometimes much more difficult to do than we might think. The winter wellness partnership in Cornwall is working well to tackle that problem, joining up voluntary sector organisations, the NHS, Cornwall council and rented housing providers to deliver warmth to cold homes, and at the same time improving people’s health and well-being. With more financial support allocated from growing public health budgets to the winter wellness partnership, much more could be achieved and more people enabled to live in warm homes next winter.

Greater use of data matching by Government to enable energy companies to target help where it is most needed will also help to heat more homes. Recent analysis by the Department of Energy and Climate Change and the Department of Health suggests that warming up cold homes will prevent ill health that costs the NHS an estimated £15 million a year. In addition, there is research to show that warming up cold homes where children live could enable them to do better at school and help to close the academic attainment gap.

In the medium term, money is being spent in Cornwall on improving the insulation of homes and extending the mains gas grid, as well as exploring the feasibility of local renewable geothermal heat networks. For next winter, targeting cash benefits to people who need them most can also help. The £135 warm home discount, which will rise to £140 this winter, is available for low-income and vulnerable households. At the moment, low-income pensioners are eligible to be part of the core group for the warm home discount. The Department for Work and Pensions and DECC will match their details against those held by different energy companies to determine which energy company they are with, after which the relevant energy company will be notified of its eligible customer and instructed to apply the warm home discount to their electricity bill. The discount is, therefore, applied automatically for core group customers, including those off the mains gas grid.

The approach for low-income families with children is very different, however. Instead of having their details automatically matched and the discount applied, families have to check their circumstances against their energy company’s eligibility criteria, which vary considerably between suppliers, and apply to have the discount applied to their bills. The decision over whether to apply the discount is at the energy company’s discretion. About half of eligible families do not receive the discount, probably because they do not know about it, or, as Community Energy Plus, a leading fuel poverty charity based in Cornwall, has said, because energy companies do not always inform potentially eligible customers about the discount and because people are often put off by the forms that they have to complete to get it. The energy companies say that it can be difficult and expensive to find non-core group customers to help.

I have decided to support the Children’s Society campaign, which asks the Government to treat low-income families with children in the same way as low-income pensioners by having fixed eligibility criteria that apply across suppliers; by automatically identifying eligible families with children through data matching, rather than relying on families to apply; and by requiring energy companies to apply the discount to families who meet the eligibility criteria, rather than allowing that to be discretionary. An estimated 120,000 homes in the south-west would be helped by those changes. That is a lot of children who could be helped.

The Government are planning to consult in the coming months on how the warm home discount will be applied from 2015. I hope that the proposals I have outlined for using data matching and automatic payments can be considered to target financial help better to those who most need it, and to improve the health and well-being of many children. I also hope that as part of the consultation the Minister will consider representations that I and others have made about enabling park home residents and tenants of private sector landlords whose heating costs are paid by their landlords to benefit from the warm home discount as well. Those groups of people are often living in fuel poverty and would otherwise meet the criteria, and they would benefit enormously from the discount. I appreciate that the Government have given us helpful feedback on the points that we have made regarding those groups.

The Government have done a great deal to help people keep warm and well during the past winter. I hope that, through the consultation, we can build on that and ensure that even more people are helped in 2015 and beyond by the warm home discount.

I welcome this debate secured by my hon. Friend the Member for Truro and Falmouth (Sarah Newton), who is a formidable champion for the people of Truro and Falmouth. Yet again, she is raising in Parliament an issue that is important not only for her constituents but nationally. Although I appreciate the importance that she places on its impact in Cornwall, we are aware that it has a wider impact, and I assure her that the Government are working further to improve our policy on the warm home discount. We are working hard to reach even more of the people who need the help most, many of whom will be in her native part of Cornwall.

I also commend the important work of the winter wellness partnership in Cornwall to make cold homes warmer and improve the health and well-being of those in the south-west. The Government will be adopting a new fuel poverty definition this year, as well as introducing a new strategy and an ambitious target. That will not be just another document; it will be the first new fuel poverty strategy since 2001. We are doing more than just refreshing an old strategy; we are coming at it with a new level of determination and ambition, tempered by realism and what is practical.

That is why we will be using the low-income, high-cost definition that has been put forward by independent experts. It places greater emphasis on the energy efficiency of the home in identifying the households most likely to be suffering fuel poverty. The new definition will be particularly helpful in my hon. Friend’s part of Cornwall. Under the new definition, households living off the gas grid, particularly families in larger old homes, are likely to be judged the most at risk of fuel poverty. We are keen to strengthen the warm home discount scheme by aligning it to the new definition. We also share my hon. Friend’s desire to make it more accessible to those who are eligible.

Since its introduction, the scheme has been a success in helping a large number of households across the country with their energy costs. Between its launch in April 2011 and now, more than £700 million has been disbursed to help vulnerable households. That is £300 million more than under the previous three-year voluntary agreement. More than 2 million households have received help each year. Most of the poorest pensioners have received automatic rebates, providing much greater customer service for them.

The scheme has also helped low-income families and those with disabilities. There has been an increase in the value of the rebate, year on year, and more people receive it each year. Because the scheme provides rebates off electricity, it also readily reaches people who are off the gas grid. It is innovative and efficient, and, by and large, it has low delivery costs compared to other welfare payments. We believe that it is increasingly helping those who need it most, when they need it most. Next year, the scheme will provide 2.1 million rebates of £140—more than ever before. That will bring spending for the four years of the scheme to more than £1.1 billion. That is no small measure. Nine suppliers will be part of the scheme, providing even greater choice for consumers.

As a result of the success of the warm home discount, the coalition Government have committed to extending support through to 2016, spending £320 million in addition to the £l.1 billion that will be spent over the first four years of the scheme. That will mean continuing support for the people who need it most. However, like my hon. Friend, we recognise that people who are not part of the core group can have difficulties accessing the scheme, including low-income families with young children. Although eligible, those groups are required to apply to their energy supplier.

Under current legislation, the Government cannot provide the same data-matching service for working-age people as they do for the poorest pensioners. However, my Department is considering how policies could be better targeted, including whether and how legislation could be expanded to allow automatic payments for non-pensioners. I am happy to assure my hon. Friend that my officials have met the Children’s Society and will be working closely with it during the consultation.

Our ambition does not end there. We also want to be able to do more to identify those households, particularly in rural areas, that are off the gas grid. Despite more data being available on off-gas homes, there is still much to be done. My hon. Friend rightly made the point that there is a far greater preponderance of off-gas-grid homes in Cornwall than almost any other part of England. The coalition is absolutely committed to doing more to help off-gas-grid customers who, historically, have had a very poor deal indeed.

As well as looking at whether we can remove legislative barriers to the sharing of off-grid data, we are working closely with the Fuel Poverty Advisory Group to improve the use of the data we already have. I am also pleased to announce that, as part of our efforts to double-up our focus on helping off-gas-grid customers, my hon. Friend the Member for Suffolk Coastal (Dr Coffey) has accepted the new role of DECC off-grid champion. She will bring her insight from the all-party group on fuel poverty, as well as her own experience, to help us to drive action across a number of the Department’s policies. I met her and the big six energy companies last month in order to drive forward the deployment of energy company obligation funding in off-grid areas. We have been troubled about that, because it is clear that the larger energy companies are failing to live up to their responsibilities to deliver the ECO in rural areas in the required proportions.

Stemming from that positive meeting, a number of actions were agreed on. They included potential changes to the brokerage system in order for ECO to split off rural communities as a separate visible group to enable better targeting of ECO measures that are put to brokerage to be accessed by the large energy companies, and publishing the rural postcode list within a month of the consultation. We are also considering how parish councils and other local community groups can help to drive the deployment of ECO in rural off-grid areas by being advocates for action, by helping to collate the number of households that are keen for improvements—particularly improvements to the fabric of buildings—and by bringing them together in larger numbers so they can make efficient propositions to the energy companies for dealing with them.

The problem at the moment for many of the energy companies is that it is difficult to deal with isolated individual households scattered across an area. If we can use local communities and parish councils to collate data, find households that want measures installed and present them as a coherent group to the energy companies, it might enable us to get around some of the barriers involving data and present an attractive proposition to the major energy companies for delivering ECO to rural communities.

We also want to link ECO and the domestic renewable heat incentive, which will be launched in the next few weeks and will be an exciting development in the provision of innovative low-cost low-carbon technologies for those who are off the gas grid. It will present them with a genuine, viable alternative to very expensive heating oil. The launch of the renewable heat incentive next month will provide us with opportunities to broaden the offer to off-grid homes. My officials are working with the industry to identify opportunities to combine RHI and ECO and provide a better offer for those without access to up-front funding to install the new technologies. All that work sits alongside the regular round tables on off-grid chaired by the Minister of State, Department of Energy and Climate Change, my right hon. Friend the Member for Sevenoaks (Michael Fallon). I would also like to mention that Community Energy Plus now plays a role in the inter-ministerial round table. Following a suggestion by hon. Members, Public Health England has also been included in those discussions.

To return specifically to the warm home discount, this spring, we will consult on changes to the scheme for 2015-16, ensuring that the £320 million is spent effectively in helping low-income and vulnerable households. The consultation will include questions on further improving customer service and simplifying the scheme wherever possible, providing more help to those off the gas grid and even better targeting of those in fuel poverty based on our new low-income, high-cost definition.

I appreciate the points that my hon. Friend raised about park homes. The difficulty is that park home residents are not bill payers, so it is harder, as she mentioned, to identify them. Nevertheless, we welcome pragmatic suggestions on how we can reach them as part of the consultation. I encourage park home owners and those who speak on their behalf to participate in the consultation.

We want to make a transition to a scheme beyond 2016 in which as many of the people eligible as possible get help automatically and our data allow us to give more help to those suffering the deepest fuel poverty. Our warm home discount proposals will coincide with our consultation on a new fuel poverty strategy and an ambitious new target. We will ensure that the warm home discount is consistent with that strategy and continues to be our first line of defence on a mass scale against the impact of winter bills on the most vulnerable.

The coalition shares my hon. Friend’s determination to do far more for the off-gas-grid customer. We are in no way complacent about the need for much more action to help the fuel poor. There is a great deal of action in the pipeline and more coming forward this year. I am grateful to her for securing this debate and allowing us to put that on record.

Sitting suspended.