My noble Friend the Parliamentary Under-Secretary of State for Business, Energy and Corporate Responsibility (Lord Callanan) has today made the following statement:
The Government have today laid draft affirmative regulations for a GB warm home discount scheme in Scotland to run from 2022-23 until 2025-26.
The scheme, with increased funding of around £13 million and totalling £49 million in 2022-2023, will provide energy bill rebates worth £150 to over 280,000 low income and vulnerable households during winter, when they need it most.
WHD provides direct energy bill support, in the form of a rebate on energy bills, for fuel poor, low income and vulnerable households. It is a key policy in the Government’s programme to tackle fuel poverty and reduce energy costs for low income households. Since its launch in April 2011, WHD has provided over £3.3 billion in direct support to households in Great Britain. Now more than ever, this rebate is needed to help low income and vulnerable households with their energy costs. The scheme complements the Government’s £37 billion worth of measures this year to support households with rising energy bills and the cost of living.
The WHD is set in legislation and requires energy suppliers above a certain size to participate. While the costs of the scheme are borne by energy suppliers and, ultimately, their customers, Government set the overall spending target. In the 2020 Energy White Paper, the Government committed to extending the warm home discount (WHD) to 2025-26 and increasing its value to £475 million (in 2020 prices) across Great Britain. Since then, we consulted on proposals for England and Wales, the details of which are set out in the Government response to consultation, published on 1 April and for which the regulations have been approved by both Houses. Similar proposals could not be replicated in Scotland, because the Valuation Office Agency (VOA) whose data we will use to identify homes which are high cost to heat, does not collect that data in Scotland. The Scottish Assessors (the Scottish equivalent of the Valuation Office Agency) do not collect the same data in Scotland.
Under the Scotland Act 2016, the Scottish Government have devolved powers to design and implement a WHD although the exercise of these powers requires the agreement of the Secretary of State, and some powers remain reserved, including determining the overall size of the obligation and the obligated parties. The Scottish Government requested that the UK Government make provision for a continuation of the WHD.
The WHD in Scotland will increase proportionately in line with the GB-wide increase to the scheme: from £350 million to £475 million in 2020 prices. Based on the apportionment methodology consulted on by the UK Government, the scheme in Scotland will be 9.4% or £44.65 million (in 2020 prices) of the overall scheme value. The proportion of funding going to Scotland will exceed its share of the GB population and its share of means-tested benefits recipients. The uplift means rebates are provided to an additional 50,000 families in Scotland each year on top of the 230,000 that already receive payments, and the rebate will also increase from £140 to £150.
We have also reduced the threshold for energy suppliers’ participation in the scheme, so more energy suppliers will participate. Suppliers with a small market share in Scotland who cannot meet their obligation through the provision of rebates to their customers will be able to provide other packages of help, including financial assistance, to other low income and vulnerable households.
Under the WHD in Scotland, around 90,000 low-income pensioners will continue to receive their rebates automatically through the core group element of the scheme. In addition, around 190,000 low income and vulnerable households, mainly working age, will receive the rebate by application to their energy supplier. Scottish households in or at risk of fuel poverty will also continue to benefit from support under industry initiatives funded under the WHD, which include benefit entitlement checks, energy debt and financial assistance, energy advice, and energy efficiency measures provided to low income and vulnerable households.
This expansion of the WHD scheme forms part of the wider support to help households with rising energy bills. In May, the Government announced over £15 billion of additional support, targeted particularly on those with the greatest need. This package builds on the £22 billion announced previously, with Government support for the cost of living now totalling over £37 billion this year. This includes: help to all domestic electricity customers in Great Britain to cope with the impact of higher energy bills, with £400 off their bills from October through the expansion of the energy bills support scheme (EBSS); a one-off cost of living payment of £650 to over 8 million households across the UK in receipt of means tested benefits; additional UK-wide support to help 6 million people who receive non-means tested disability benefits receiving a one-off disability cost of living payment of £150; over eight million pensioner households will receive an extra one-off £300 this year to help them cover the rising cost of energy this winter. For households that are not eligible for cost of living payments or for families that still need additional support; the Government are providing an extra £500 million of local support, via the household support fund. The fund will be extended from this October to March 2023, bringing total funding for the scheme to £1.5 billion. Millions of the most vulnerable households will receive at least £1,200 of one-off support in total this year to help with the cost of living.
Subject to Parliamentary processes, the UK Government will implement the scheme in Scotland as quickly as possible and support will be provided to Scottish households during the winter.
More information on the warm home discount scheme will be made available over the summer on gov.uk/the-warm-home-discount-scheme.