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The Trust’s response to expanding the Warm Home Discount Scheme, 2025-2026 consultation

Fuel poverty remains a daunting reality for millions of households across the UK. The intersection of escalating energy costs, the pressing need for sustainable energy solutions, and the urgency of protecting vulnerable communities requires focused and immediate action. The Trusts aim is to ensure that the expansion of the Warm Homes Discount (WHD) scheme efficiently uses funds to alleviate fuel poverty and effectively targets those in need.

The Trust has extensive experience supporting vulnerable groups.

An Oxford Economics Social Return on Investment (SRoI) analysis (published in May 2024) of the Trust’s operations in alleviating the impact of fuel poverty, from April 2020 to March 2024, highlighted:

Two key insights from ‘Towards an end to fuel poverty in Britain’ (published in November 2024) emphasise that:

 The Trust highlights what we believe are the key areas in response to the consultation:

Impact on Fuel Poverty Numbers

The primary question for the Trust is whether an increased number of individuals experiencing fuel poverty will receive support.

While overall the policy change is expected to support a larger number of fuel-poor households and would increase the overall coverage of fuel poor households from around 30% of total households in fuel poverty to around 45%, this will still mean that 55% of households in fuel poverty will not receive the rebate.

This issue is particularly important because the scheme’s expansion has not been structured to enhance the support offered to households experiencing fuel poverty.

The scheme expansion must address concerns about excluding fuel-poor households not receiving means-tested benefits. Gaps exist for those just above benefit eligibility, which need attention.

We concur that by removing the high-cost-to-heat threshold and making all recipients of means-tested benefits eligible, a greater number of low-income households will benefit from the £150 rebate. Furthermore, the expansion of the Park Homes WHD scheme will assist those without direct energy supplier contracts, thereby enhancing accessibility.

Net Effect

The scheme expansion will help more fuel-poor households but is limited in its scope as 55% of those in fuel poverty won’t get the rebate. The Government must implement mechanisms to ensure the WHD aids those who need it most.

There may also be gaps affecting those who fall just outside the eligibility criteria for benefits, which should be addressed.

However, given the likelihood that more individuals in fuel poverty will receive support, the Trust endorses the expansion of the scheme and the elimination of the high-cost-to-heat threshold

 Targeting Efficiency of Funds

The Trust questions whether the support will be more effectively targeted. The funding now focuses on income-based eligibility, prioritising those struggling financially rather than those in high-cost-to-heat homes.

As the scheme is extended to a larger but less-targeted group, as the consultation states: the percentage of recipients that are fuel poor is expected to drop from around 40% to 30%.

This will still mean that the vast majority of spend (70%) will be to households not in fuel poverty. This issue is particularly important because the scheme’s expansion has not been structured to enhance the support offered to households experiencing fuel poverty.

While means-tested benefits can simplify identifying financial need, households in expensive-to-heat homes who do not qualify for benefits – like pensioners, disabled individuals, or low-income workers – may lose support despite being in fuel poverty. The Trust is concerned that this may overlook some fuel-poor households not qualifying for benefits.

Net effect

Expanding the scheme to a broader less targeted group limits its impact on reducing fuel poverty. With the cost of the scheme to an average dual fuel billpayer being £37 (a cost increase of £15 on the current scheme), this seems like a missed chance to better support those in greatest need.

Although the new approach addresses financial hardship, the Trust worries it might miss some fuel-poor households with high heating costs that do not qualify for benefits. As the consultation document states: Of those who claim a means-tested benefit, we estimate that around 30% will not go on to receive the Warm Home Discount due to other factors.

Reduction in Energy Inequality

The Trust’s primary concern is whether the expansion will address regional fuel poverty disparities more prevalent in rural areas, assisting only urban and low-income households.

Rural and off-gas grid households, which typically incur higher energy costs, may be disadvantaged if they do not receive means-tested benefits.

Net effect

The policy may reduce energy inequality in urban areas, but it could exacerbate conditions for rural and off-grid households that are not receiving benefits.

Scotland

For 2025/26, we agree with an increase spending in Scotland proportionately to that in England and Wales by raising suppliers’ non-core spending obligations. This budget must benefit the broader group.

We agree the most effective option is to maintain the broader group in Scotland for now, ensuring more people qualify for rebates by proportionately increasing suppliers’ non-core obligations alongside any expansion of the scheme in England and Wales.

Regulatory Stability

The conclusion from the Trust’s report, ‘Towards an end to fuel poverty in Britain’ (published in November 2024) highlights the need for a comprehensive, collaborative, and long-term approach to effectively tackle fuel poverty in Britain.

Recent actions by Ofgem and the Department for Energy Security and Net Zero mark important steps in addressing persistent fuel poverty. However, practical solutions and strong collaboration among government, industry, and organisations like the Trust are essential.

The Trust is concerned about unstable regulatory and government policies for vulnerable customers. Isolated decisions on individual policies often cause unintended issues for charities and energy suppliers. A coordinated approach is needed to ensure stability and enable better support for vulnerable customers. This will enhance the capacity of charities and energy suppliers to deliver coherent and sustainable support to vulnerable customers.

Conclusion

The Trust supports the scheme’s expansion in principle but is primarily concerned about whether it will increase support for individuals experiencing fuel poverty and if this support will be more effectively targeted.

While the policy change aims to support more households, with a bigger but less-targeted scheme, it only increases assistance to around 45% of fuel poverty households, which means 55% of fuel-poor households will not receive the rebate.

Even though the scheme’s spending will increase, since the percentage of recipients who are fuel poor is expected to drop from around 40% to 30%, the funding is not being more effectively targeted because the majority of the spending (70%) will go to households that are not in fuel poverty.

While the changes will increase eligibility and reduce some fuel poverty, some high-cost-to-heat households may lose benefits. Additional measures, like discretionary funds, should be considered.

The expansion of the scheme is welcome but a simplified scheme, such as the Scottish Government’s Social Tariff Working Group proposal, is an approach that should be considered.

We urge the Government to ensure the WHD scheme expansion efficiently uses funds to alleviate fuel poverty and effectively targets those in need.