Warm Home Discount Scheme 2021/22 - Consultation Response

As an organisation supporting fuel poor and vulnerable households across Great Britain to lower their energy bills and stay warm and well, we are pleased that this vital scheme will remain in place. We were one of the signatories to the letter sent by National Energy Action and Fair by Design to the Minister in May asking for clarity on the future of the WHD scheme and requesting an extension of its support. We particularly welcome the recognition of the important role that Industry Initiatives play in providing more lasting help and support to those that need it most.

We fully understand that this WHD consultation has been delayed due to the Covid-19 pandemic, and consequently the need to maintain an interim scheme during 2021/22 prior to a detailed consultation next year on the long-term future of WHD. We are glad to see BEIS is already referencing possible future changes for the WHD from 2022 in this consultation as it reinforces our shared ambition the scheme will continue for many years to come.

We would urge you to press ahead as soon as possible next year with the consultation on the longer-term extension of WHD to 2030. This will give suppliers, those organisations involved in supporting households to access the WHD rebate, and those involved in delivering Industry Initiatives, confidence that this vital support is secured for the future, particularly in light of continued slow progress on energy efficiency of homes of the fuel poor. Government is very significantly behind the trajectory needed to meet the statutory target for all fuel poor homes to be energy efficiency Band C by 2030. The latest annual statistics show only 12.4% of fuel poor homes at that level. Progress on the 2020 milestone of all fuel poor homes being at Band E or above has stalled, only increasing by 0.4% in the most recent twelve months for which data is available. These facts demonstrate that there is a continued strong case for the WHD to continue into the future. Without that support many of the poorest households will face even greater hardships and Government’s progress on fuel poverty will be measured as even worse given the way the Fuel Poverty Energy Efficiency Rating rightly takes WHD rebates into account.

We have only responded to the questions in this consultation that are relevant to our business and to which we can respond with authority and evidence. Our responses are also influenced by the perception that the fewer changes there are to the scheme in 2021/22 the greater the chance of the necessary legislation passing in good time. We are conscious of the impact that the delay in ECO3 legislation caused to the delivery of ECO measures in 2018 and we are very concerned about a similar impact on the WHD – in particular on the Industry Initiatives element.

1. Do you agree the size of the rebate should remain at £140 for 2021/22? If not, what size do you think the rebate should be, and why?

Yes. The level of rebate has remained stable for a while now and is well understood by the households that receive it and the agencies that support them. It provides an effective boost to households to encourage them to use their heating appropriately. Reducing the amount below £140 would limit that impact and dilute its effectiveness.

Conversely, a higher level would reduce the potential for more eligible households to benefit. We are positive about the inflationary increase to the overall WHD pot being used to support more households in the broader group or via Industry Initiatives. 

2. Do you agree that the Core Group element of the Warm Home Discount scheme should continue unchanged for a one-year extension, to scheme year 2021/22?

Yes. We agree that pensioners are a vulnerable group and are one of the groups most susceptible to the effects of living in a cold home.

3. Do you agree that the Broader Group element of the Warm Home Discount scheme should continue unchanged for a one-year extension, to year 2021/22?

Yes. The fewer changes that are made the more likely it is that the legislation will go through on time for April 2021, which is vital. We would be supportive of a review of the Broader Group element in next year’s consultation that might result in better integration of the variety of different eligibility criteria currently used by suppliers.

4. For energy suppliers only: how many of your Broader Group recipients were eligible under the mandatory criteria and how many under additional criteria approved by Ofgem in scheme year 9? How many of your Broader Group recipients in scheme year 9 were also Broader Group recipients in scheme year 8 and scheme year 7? We have provided a template for this.

n/a

5. Do you agree that the cap on debt write-off should remain at £6 million for scheme year 2021/22?

Yes. This is a proportionate response in the short term to the Covid-19 pandemic. Longer-term we would support the continued reduction of the cap due to the better value from investment that other affordable warmth and energy efficiency projects deliver.

6. Do you agree that there should be a cap on individual debt write-off at £2,000 for scheme year 2021/22? If not, provide evidence for alternative levels.

Yes. If anything, £2,000 is on the high side of where the cap should be set. There is a balance to be struck between helping customers that have gotten themselves into debt and dealing with problems that should have been addressed earlier by their energy supplier. Where the energy company has allowed the level of debt to reach thousands of pounds, it may often be as a result of metering or billing problems by the supplier, which in many cases should have been dealt with at an earlier stage and would often have to be written off at these types of levels in the absence of Warm Home Discount. It is clear that debts of more than £2,000 will have started to accumulate well before the current pandemic and so a higher level of write-off could not be seen as addressing the effects of Covid-19.

7. Do you agree that the restriction on providing financial assistance to Core Group and Broader Group recipients should be removed?

Yes. We support financial assistance (in the form of emergency meter top-up) to households that might also be Core Group or Broader Group eligible that find themselves in severe need but whom suppliers cannot currently support because they may later receive a WHD rebate.

However we would not support the provision of financial assistance as a widespread payment of an extra £140 to large numbers of households already receiving Core Group/Broader Group rebates. Funds used in this way would reduce the amount available for energy advice, income maximisation and energy efficiency measures – all of which offer a much greater social return on investment and bigger impact on fuel poverty in the long term.

8. Do you agree that the £5 million cap for financial assistance (12.5% overall industry initiative spend) should be maintained for the scheme year 2021/22?

Yes. We understand that the actual spend in this area has been much lower than £5 million, so the cap may not previously have been necessary, but if a significant amount were to be spent in this area it would severely impact the delivery of Industry Initiative programmes. That increased spending could well happen if the Government does decide to allow financial assistance to the Core and Broader Groups and we believe it would be essential in those circumstances to maintain the cap.

9. Should Government keep the financial assistance eligibility criterion of customers living in communities wholly or mainly in fuel poverty? If not, please provide reasons.

Yes. The need to focus WHD support for households in, or at risk of, fuel poverty is important.

10. Do you agree that, in addition to energy advice, advice about the benefits of smart meters should be provided, so far as is reasonably practicable, to every customer benefiting from an Industry Initiative?

Yes. During the pandemic we’ve seen how useful smart pre-pay meters have been to help ensure continuity of supply and accuracy of bills for fuel poor and vulnerable households. Our WHD Industry Initiative-funded LEAP programme includes an element of discussion about smart meters between households and our energy advisors. As a business we have a trained ‘smart meter expert’ team that are on hand to answer more detailed questions from clients.

11.Do you agree that businesses installing and repairing boilers and central heating systems under the WHD Industry Initiatives should be TrustMark registered from 1 April 2021? Please provide reasons for your answer.

Yes. It is a straightforward way to align WHD Industry Initiatives with ECO and the Green Homes Grant and to ensure quality. All of the installers that work with AgilityEco on programmes that are funded by the Industry Initiatives are Trustmark registered.

12. Do you agree that the installations of boilers, in high risk properties and central heating systems in all homes, should be installed in accordance with PAS 2030:2019 and PAS 2035: 2019 from 1 April 2021? Please provide reasons for your answer.

Yes. On balance we agree with this proposal for high risk properties and central heating systems. We foresee that the need to adhere to these standards is very likely to delay the installation of a replacement boiler in vulnerable, high-risk homes in a ‘no heat/hot water’ situation, leading to additional suffering for them. However, we also see the benefit of ensuring that, in a minority of complicated cases, a ‘whole house’ approach is taken that will ultimately benefit the household more. We wouldn’t support this requirement for the majority of properties that are recognised as ‘low risk’.

With regard to full central heating installations – it is our experience that this is rarely an emergency measure and though clients may be in significant fuel poverty and have inadequate heating, they are unlikely to be in a ‘no heat/hot water’ situation and therefore able to cope with a short delay.

So whilst this new standard may lead to delays in the installation process, we feel this is warranted given the more complex needs and care that must be taken in such properties.

13. Do you agree with the introduction of technical monitoring for boilers and central heating systems installed or repaired under WHD from 1 April 2021? Please provide reasons for your answer.

Don’t know. We are uncertain whether this is a positive development or not – it will depend on the nature and the cost of the model being introduced.

AgilityEco currently undertakes technical monitoring for all of the boilers and central heating systems installed via our ECHO scheme. The clear channel of communication between the relevant teams involved in the scheme ensures it can be delivered quickly and efficiently which minimises disruption to the client and the cost to the overall WHD Industry Initiatives budget. If we are able to continue with this approach, we would be supportive.

However, if a new technical monitoring process was introduced involving remote organisations using rigid processes it would increase delays and push up costs. We therefore await the results of the Trustmark trial with interest.

14. Do you agree that the supplier participation thresholds should remain unchanged for scheme year 2021/22?

Yes. We agree with retaining the same thresholds during 2021/22 to minimise objections to the regulations, ensuring that the legislation passes in good time.

15. Can you provide evidence of the administrative costs of delivering the Warm Home Discount rebate and the Industry Initiatives scheme? We have provided a template for this.

We have not included figures in this response as we would like it to be treated as non-confidential, but we would be happy to share data on administration costs of our Industry Initiatives with BEIS separately. One observation that we can provide is that shared Industry Initiative projects mean a much lower administrative burden on the participating suppliers, and therefore represent good value for money.

16. Do you agree with the requirement for the failing energy supplier to report on their paid and unpaid Core Group and Broader Group customers and Industry Initiative spending incurred? If not, please explain your reasons. We welcome views on potential alternative arrangements.

Yes. Such reporting will support vulnerable customers. This would give organisations more confidence to work on the delivery of Industry Initiatives with a supplier that might be perceived as being riskier.

17. Do you agree that an SoLR and WHD participant who volunteers to pay non-core obligations of a failing WHD participant should be allowed 10% non-core overspend? If not, why not? If you think a different % should be applied, please explain your rationale.

Yes. This will help the scheme work for more people. We would assume that 10% overspend would be sufficient to ensure the affected households receive the WHD.

18. Do you agree with removing the second reconciliation?

Don’t know.

19. Do you agree with the proposal to carry forward voluntary and compulsory smaller energy suppliers’ undelivered rebates and add the value of these rebates to their non-core obligation for the scheme year when they become fully obligated? Please provide reasons for your answer.

Yes. This ensures fairness between smaller and larger suppliers and also maximises the benefit for potential WHD recipients.

20. How might changes to scheme design result in costs to suppliers, for example if eligibility were different in different national schemes, and how could these impacts be prevented or mitigated?

We would expect that if there were different national schemes with different eligibility criteria and/or administrative arrangements, this would increase complexity and cost in the administration and in the delivery of national projects. All suppliers have customers in all nations so having to divide up their offering based on where people happen to live would be an enormous burden. for Industry Initiative providers such as ourselves, and for the energy companies. There would be a need for separate scheme notifications, administration, and accounting for industry initiatives. Different eligibility checks and supplier thresholds would be confusing and it’s unclear what the benefit would be for households.

21.Should supplier thresholds for separate schemes be the same in England and Wales and Scotland? Please provide your reasons.

In principle we would strongly recommend that supplier thresholds should be the same across Britain, to avoid confusion, complexity and additional expense which would ultimately be to the detriment of low income and vulnerable households.

In summary, we welcome this consultation and the proposed continuation of the vital Warm Home Discount (WHD) scheme. Our responses have been influenced by our desire to ensure that the required legislation is passed in good time to ensure the WHD scheme continues during 2021/22. Longer-term we would like to see a WHD scheme where:

• Households receive at least the current level of rebate
• More accurate targeting of the rebate ensures that those most in need are able to get it
• The Industry Initiatives element of the scheme is retained and expanded, reflecting the high benefit to cost ratio that Industry Initiatives delivers  

If you'd like to discuss any aspect of this response, we'd be delighted to hear from you and engage in discussion. You can contact us by email.