I thank all noble Lords who have contributed to this debate. The context is that, this year, as we all know, we have witnessed an extraordinary increase in the cost of energy. The Government recognise that millions of households across the UK may need further support with the cost of living, in particular energy bills. That is why the Government have so far announced additional support this year worth more than £37 billion, including targeted support for many of those in the groupings we are talking about today—those on the lowest incomes.
All domestic electricity customers in Great Britain will receive £400 off their bills from October through the energy bills support scheme. Meanwhile, more than 8 million households across the UK in receipt of means-tested benefits will also receive £650 as a cost of living payment. Further payments will be made to pensioners and disabled people. The Government remain committed to helping low-income and vulnerable households heat their homes over the coming winter. Although energy efficiency measures provide long-term assistance in reducing energy bills, as the noble Lord, Lord Teverson, reminded us, there is a clear need for direct financial support now. In this context, the warm home discount remains a key part of our overall approach to tackling fuel poverty.
This is the largest expansion of the scheme since it began. In 2021-22, the energy envelope was worth £354 million across Great Britain; in 2022-23, it is rising to £523 million. This scheme will ensure that 2.8 million households in England and Wales receive a rebate off their energy bills each winter right through to 2026. That means that around a third more households than previously will receive a rebate each year. In addition, most will receive their rebates automatically. This means that households will have much more certainty about receiving the payments when they need them most. A large part of my postbag has been people writing to their MPs and then on to me if they have not been selected as part of the core group 2 element; people do not understand how the scheme works.
The Government have recognised the need for certainty about the support to households in Scotland. We recently consulted on an extension and expansion of a separate warm home discount scheme in Scotland. That was as a result of the Scottish Government not being able to make their minds up about whether they wanted to be part of this scheme, not because of any
delays on our part. The Government will publish the response shortly and lay the regulations for the scheme in Scotland as soon as possible.
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These are also the most ambitious reforms better to target households in fuel poverty. The reforms enable the Government and energy suppliers to focus the support on those most in need and provide that support automatically to households in England and Wales.
I turn to the points made by noble Lords. First, in response to my noble friend Lady McIntosh, we will have a comprehensive challenge process. People who believe that they should be eligible will be able to check online and challenge any decision not to include them via the call centre.
On the point about targeting made by the noble Lord, Lord Teverson, 69% of fuel-poor households are in receipt of means-tested benefits. These reforms use the best data available to improve the fuel poverty targeting rate and will ensure that most households can receive their rebates automatically without having to apply. As I said earlier, these changes will be introduced alongside the £37 billion that the Government have announced to help with energy bills and the cost of living this year.
A number of noble Lords mentioned failing suppliers and the SoLR process. All suppliers of last resort have so far honoured the warm home discount rebates. The reforms we are making will, in fact, make it easier for them to do so in future. As I said, we are expanding the eligibility criteria.
In response to my noble friend Lady McIntosh’s point about social tariffs, the warm home discount replaced social tariffs in 2011, as it was considered a more transparent and consistent way of supporting households.
In response to the points made by the noble Lord, Lord Best, first, I thank him for hosting me at his event a couple of weeks ago. Where a tenant is named on the electricity bill or account of a particular participating supplier, they may be eligible to receive the warm home discount. This rule was adopted as the named billpayer is responsible for any payment issued on the electricity account and it ensures that we are able to verify customers’ eligibility and therefore reduce the risk of fraudulent claims. In the case that the noble Lord mentioned, where a landlord is supplied with the electricity, we encourage tenants to speak to their landlords and see whether they can also be listed on the electricity bill or account, which would enable them to receive the discount.
In the case of park homes, residents will be able to apply for a rebate under a special scheme called the park homes warm home discount scheme, which has been set up specifically for permanent residents living in a park home. Separately, many of our energy efficiency schemes around insulating properties apply specifically to park home residents. The special park homes scheme is funded by energy supplier contributions as part of the industry initiatives spending.
In response to some of the points made by the noble Lord, Lord Teverson, I am afraid that it is the case that, without perfect data, it simply is not possible to target fuel poverty 100%; I only wish it were. For
that, we would effectively need household income data for all households, as well as data about the energy efficiency of every household. I am sure that many of my officials in BEIS wish that we had that data—it would make a lot of our schemes a lot easier—but, of course, we do not have it at the moment. This is an important first step, and we will always look to improve the targeting rate in future.
The universal credit rollout will allow some improvements, as will more comprehensive coverage of energy performance certificates—EPCs—which are also gradually being rolled out. Nevertheless, all the people benefiting from the scheme will be low-income households, even if they are not necessarily in fuel poverty, although, clearly, many of them will be.
On the point about Northern Ireland, the primary legislation for the warm home discount does not cover it. It is part of a different, all-Ireland energy market, so it would be very difficult for the scheme to be directly replicated.
On the point about prepay customers on smart meters, they can be credited directly. Those who are still on analogue meters are usually paid in vouchers, which enable them to access credit to top up their meters.
Moving to the points made by the noble Lord, Lord Lennie, we will lay the reconciliation regulations in the autumn—I am sure the noble Lord awaits them—ahead of the first reconciliation exercises conducted towards the end of the year.
With regard to the famous algorithm, the Government will apply a model that estimates households’ energy costs using property characteristic data. These characteristics are property type, property age and property floor area. They allow us to estimate energy costs accurately while, as far as possible, attempting to keep the process simple and transparent. This enables us to ensure that low-income households with the highest energy costs receive a rebate and that the vast majority of households receive those rebates automatically. The Government have been working with external experts to review and improve the algorithm and other statistical processes that we use in this system.
In reply to a related point from the noble Lord, Lord Teverson, we should accept that the scheme’s targeting will never be perfect, but it will be much improved. As additional data become available, we will attempt to improve it further in the future.