Warm Home Discount (Miscellaneous Amendments) Regulations 2016
That the draft Regulations laid before the House on 4 July be approved.
Relevant document: 6th Report from the Secondary Legislation Scrutiny Committee
My Lords, I am pleased to open the debate on the regulations, in my first week in this post. In her first speech, the new Prime Minister recognised the hardships faced by poor households in Britain, families who,
“can just about manage but worry about the costs of living”.
As part of that, this Government are committed to tackling the problem of fuel poverty, and that is why I am moving this Motion today.
Before going into the detail of the changes proposed in the regulations, I shall respond to the amendment tabled yesterday by the noble Baroness, Lady Jones of Whitchurch. This has been a highly unusual period for both Government and Parliament and, yes, it means that getting these regulations before the House has taken longer than we would have liked. However, if we approve the regulations today then we expect payments to the core group of recipients to begin in mid-October, with 1.2 million rebates reaching customers this winter before the end of January, during the coldest period. This represents over half the intended recipients. We expect the remaining 800,000 recipients to receive their rebates by the end of February, although some may receive them as early as the autumn. I recognise that this is a little later than in previous years but, if we do not pass the regulations today and instead wait until after the Recess, we estimate that payments will begin in mid-December and not finish until March.
I turn to the regulations. I shall give some background on fuel poverty and the warm home discount scheme to put them in context. The warm home discount is one of a range of policies to address the factors contributing to fuel poverty. It is a bill rebate, or discount, of £140 from energy suppliers directly to customers. Other policies, such as the energy company obligation, are focused instead on providing energy efficiency measures. However, this rebate reaches over 2 million households each year, giving them immediate support to heat their homes when they need it most.
The warm home discount scheme is currently made up of three parts. First, there are eligible pensioners, described in the regulations as the “core group customers”, who automatically receive a bill rebate of £140 from their supplier. Secondly, there are other low-income and vulnerable customers, such as low-income families and those with long-term disabilities, who are described as “broader group customers”. These customers can apply for rebates through their supplier. The amount is the same, £140. Thirdly, there is the industry initiatives element of the scheme, whereby suppliers provide a range of support measures that include debt assistance, benefit entitlement checks and energy advice to domestic customers in or at risk of fuel poverty.
Over the next five years, we want to simplify the way the scheme is delivered, targeting it more accurately at those households which need it most. To enable this we are reliant on new primary legislation. Data-sharing powers in the Digital Economy Bill, if implemented, could see more of the warm home discount provided automatically. This will reduce the administrative costs for suppliers to participate in the scheme and, importantly, will allow us to provide more accurate targeting. Because we are reliant on this new primary legislation, to implement these changes we propose that these regulations cover two winters—until 2017-18. If we secure the powers, we will consult on our proposals, giving noble Lords another opportunity to comment.
For these amending regulations, the Government consulted on their proposed extension of the scheme in April, proposing some relatively small changes to improve effectiveness and make the regulations simpler and more accessible. Respondents to the consultation were supportive of extending the scheme, and the government response was published at the end of June.
There are four main changes to the warm home discount scheme. The first is that local authorities or charities will be able to submit proposals under the industry initiatives element of the scheme; for example, schemes that offer support to people with specific health conditions linked to living in a cold home. The second proposed change is to place a limit on the total amount that suppliers are able to spend on debt write-off. While we understand the help that debt write-off can provide—suppliers would still be able to use half of this allocation for write-off—we would like to encourage greater diversity of approaches. Thirdly, we are providing the option to pay the rebate on the gas bill rather than the electricity bill, if requested by the customer, and finally, we will require energy suppliers to report exactly how many pre-payment meter vouchers have been redeemed, encouraging them to maximise take-up among the poorest customers. I commend the regulations to the House.
Amendment to the Motion
At end insert “but that this House regrets that two million low-income and vulnerable households will have substantial delays to their rebates for most of the winter, despite government promises to have the rebate in place by 1 December 2016; and agrees with the assessment in the Secondary Legislation Scrutiny Committee’s 6th Report that “the unattainability of this objective [that rebates should reach customers before the winter period] would appear to result from the tardiness in securing cross-Government agreement”.
My Lords, first, I welcome the Minister to this addition to her brief—that is the best way of putting it—and look forward to debating energy issues with her in the months to come. I thank her for introducing the regulations this afternoon.
The Minister will of course know that it was the last Labour Government who initially took steps to convert the earlier voluntary scheme into a compulsory scheme back in 2009, so of course it is natural to expect that we welcome the proposed extension of the scheme. No one should struggle to heat their homes over winter, and the continuing scandal of fuel poverty and excess winter deaths shows how vital this policy has become. However, we have major concerns about the delay in tabling these regulations, which have now been echoed by the Secondary Legislation Scrutiny Committee, which concluded that the delays will make the policy intent unobtainable this winter. That is the reason I am moving the amendment this afternoon. I will therefore ask the Minister about the timing of these extended regulations, as it appears increasingly unlikely that the policy objective of reaching customers before the winter months will be achieved.
The policy was announced by the Chancellor in November 2015, but by all accounts—the Minister confirmed this—there was a delay of five months while cross-departmental wrangling was resolved. However, I do not accept what the Minister said—that this can be written off as an unusual period. After the four-week consultation ended, it took another two months for the regulations to be laid before Parliament, and now here we are on the last day, rushing them through.
The result of this delay is that the rebates will begin to apply only in December, with some not being received until January or February next year, which is well after the cold winter weather will have set in. A number of respondents to the consultation raised particular concerns about customers on prepaid meters, who have to pay up front, often on the most expensive tariffs, and who will not receive the payments in time to make a difference to their fuel poverty. Does the noble Baroness agree that this delay is unacceptable? What steps is she taking to address the problem through departmental co-operation so that these events do not happen again? What dialogue is taking place with the suppliers to introduce the rebates in the speediest possible way, given that this delay has occurred?
Secondly, there remains a problem with targeting the payments effectively. The then Secretary of State acknowledged earlier this year that only 15% of households in receipt of rebates have both low incomes and high energy costs—that is, they are in fuel poverty. Meanwhile, in 2014 over 10% of households were classified as being in fuel poverty, and the number is rising. There is an urgent need to target the payments more effectively to those most in need. Therefore, can the Minister clarify how the proposed data sharing will improve targeting to the most vulnerable customers, many of whom are unaware of their entitlements to these payments?
Finally, how do the Government intend to address the criticisms of the CMA and others that energy companies continue to overcharge their customers? This is compounded by the difficulties that suppliers put in place for customers seeking to switch. Indeed, a recent Sunday Times consumer advice article recommended that people did not even try to switch suppliers until the Government had made the process easier. For that reason, I am moving the amendment and I look forward to the Minister’s response.
My Lords, I am very grateful to the noble Baroness, Lady Jones of Whitchurch, for bringing several aspects of these regulations to our attention—not least the comments from the Secondary Legislation Scrutiny Committee.
Of course, as the Minister said, the Prime Minister, in one of her first speeches, made many comments on social justice, but I fear that these regulations were written before she made that speech and perhaps there has not been a chance to assimilate the new spirit that she wants to introduce. As I understand it—perhaps the Minister will correct me if I am wrong—the regulations contain several things that are less than desirable, one of which is that they cover only the next two years, whereas in last year’s spending review there was a guarantee that the scheme would carry on until 2021.
On the larger picture, it is very depressing that the long-term strategy of reducing bills through energy efficiency—particularly measures that came in under the coalition Government, such as the zero-carbon homes measure—have been put on hold and we have seen this Government back-track, not least in the recent Housing and Planning Bill. Therefore, we have a big problem. The fact that people are in severe fuel poverty and are unable to heat their homes during the winter is, as has been said many times in this Chamber, one of the biggest disgraces for a civilised society.
The funding for the years after 2018 will be based on the number of customers who have benefited from rebates. What do the Government intend to do to promote the scheme to people who can benefit from it, making sure that they do not miss out?
Finally, the Explanatory Memorandum says that the Secretary of State can conduct a review if it is thought desirable. Perhaps the Minister can say a little more about under what circumstances it will be desirable. She mentioned that there would be another opportunity for noble Lords to comment, but we feel very strongly that this review needs to happen so that we are quite clear about the effect of the regulations and so that we have another chance to push for something better.
My Lords, any of us who have witnessed genuine fuel poverty—disabled pensioners, for example, saving pennies to try to keep warm—will not fail to have been deeply moved. Therefore, in the light of what we have heard, will the Minister tell us whether it might be possible to make sure that this coming winter we are able to assist those people by bringing forward the Government’s plans?
My Lords, I thank the noble Baroness, Lady Jones of Whitchurch. As she says, there is some agreement across the House on the importance of tackling fuel poverty. Like her, I look forward to further debates on this issue in the months, and even years, ahead.
As I have stated, these regulations were prepared in difficult circumstances. I very much regret that they have come before this House so late. Although some households will receive their rebates later than in previous years, the majority will reach customers during the coldest months of the year. As I stated in my opening remarks, payments will start in mid-October and not in December, as I think the noble Baroness, Lady Jones, feared.
To respond to another of her points, we are in touch with suppliers and have put in place steps to ensure that they can begin to credit customers’ accounts by mid-October, helping those customers to keep warmer. We will also closely monitor delivery during the scheme, especially given the delay. However, I say to the noble Lord, Lord Berkeley, that I cannot perform a miracle. I can reassure him that I have tried to be completely transparent about what the new timetable is as a result of the delay, which I think we all regret.
I hope that the unusual circumstances of this year will not be repeated next time round. As the new Minister, I take note of what has been said about the importance of avoiding delays in the future and the wish of noble Lords to be able to engage.
As it happens, the Digital Economy Bill, which has been introduced in the other place, will provide the powers to be able to combine data on benefits and the housing stock, helping us to identify more households in fuel poverty. The Government accept that the targeting of this scheme could be improved and, therefore, we are seeking to take steps to improve it. The new powers will provide the Government with the opportunity they need, and also opportunity for debate. We will, of course, be consulting, as we try to do on these sorts of schemes, on the way that we will go about using the new information-sharing powers that we hope to obtain.
The noble Baroness, Lady Miller of Chilthorne Domer, rightly pointed out, and I can confirm, that we have committed to extending the warm home discount to 2020-21. That discount continues to help a large number of poorer households with their energy costs, right across the country, at a time when they are most in need. We will work with stakeholders to deliver these changes efficiently and will continue to provide help where and when it is needed in the most effective way. This obviously complements other proposals that either exist or are being consulted on, such as the energy company obligation and improvements to homes in the private rented sector, which have some of the worst energy efficiency ratings.
The noble Baroness also mentioned measures stemming from the CMA report, which is one thing that I plan to read this weekend. If I have anything further to say, I will certainly come back to her. I look forward to learning from her in this new brief.
I hope that noble Lords will agree that these regulations are important and forgive us for the delay. I hope that the noble Baroness will feel able to withdraw her amendment.
My Lords, I am grateful to the Minister for the regret that she expressed about the timetable and the late registration of the regulations before the House. Obviously, that goes some way to addressing our concerns.
We could argue about the five months. I do not think that the unusual circumstances—or however we want to describe them—go back to November of last year. Still at the heart of this issue is a fundamental problem about cross-departmental working and cross-departmental policy discussion, which seemingly remains unresolved. We were looking for the opportunity to hear from the noble Baroness that the Government understand that, are taking it seriously and are addressing it.
I did say that I take the point about interdepartmental co-operation. It was quite an unusual period in the run-up to the referendum lasting several months: it felt like that to me. However, I am a newcomer to this subject and all I can do is to learn going forward. Cross-departmental agreement in these sorts of areas, particularly between DWP, the Treasury and others is obviously extremely important.
I thank the Minister for that intervention. I have one other point. The timetable that is set out assumes that the data matching will go to plan—the timetable with the DWP is 10 weeks. A lot of those IT projects tend to have optimistic timetables in my experience, so we are relying on that data-matching being done within 10 weeks. Otherwise, there will be a further delay which everyone would find very regrettable. There is clearly more work to be done on targeting and how we can get the rebates and the payments to those in greatest need. I understand that this cannot necessarily be resolved within this particular set of regulations, but there is more room for dialogue on that issue in the months to come.
Having heard what the Minister has to say, I will not detain the House any longer. I do not intend at this stage to press this amendment to a vote. It is the Lord Speaker’s last day in post barring disasters over the summer, so it is only fair to give her a gentle ending to her distinguished service. On that basis, I beg leave to withdraw the amendment.
Motion to Approve
House adjourned at 6.18 pm.