Outcome of the BEIS WHD consultation is published

21/06/2018

On Friday 15th June, BEIS released its much-anticipated response to the consultation on the future of the Warm Home Discount (WHD) (see our briefing from April 2018).

Prior to the publication of the response, we were particularly interested in three key highlights from the original consultation proposals. To recap, these were:

  • A significantly increased budget available for industry initiatives such as LEAP and ECHO
  • Regulations covering the whole three remaining years of WHD, enabling greater funding certainty and reducing the current annual “stop-start” cycle
  • Including “financial support to be spent on energy bills” (such as prepayment top-ups)  as qualifying spend.

The response published by BEIS on Friday has broadly met our expectations and we welcome the approach that BEIS has adopted on many of the proposals – informed in part by 60 respondees (comprising local authorities, charities, energy suppliers and industry bodies). On the whole, the consultation response has been fairly well received across the national media, with the main message being that tens of thousands more households with a smaller energy supplier are set to receive the one-off £140 annual energy bill reduction.   

Here is a summary of the responses which we are pleased to see:

  • Increased scope for Industry Initiatives: BEIS noted overwhelming support for increasing the cap on Industry Initiatives spending from £30 million to £40 million. This is something that we have championed from the outset and we are delighted that there is going to be more flexibility to support vulnerable customers through holistic programmes and services. Hand-in-hand with this, we’re also extremely pleased to note that households identified under an ECO flexible eligibility declaration (LA flex declaration) will now automatically qualify as being eligible for support under Industry Initiatives. This signals a further welcome shift towards an increased role for Local Authorities, the key partners in our vulnerability and fuel poverty alleviation initiatives.

 

  • Debt cap reduced: The debt cap will be reduced from £12million to £10 million, with further reductions in the next two years. We were in favour of reducing the debt cap with a view to seeing the funding available for more permanent support being increased. We believe that Industry Initiatives should be focused on supporting households to tackle fuel poverty for the long-term and are pleased to see that BEIS shares this view.

 

  • Multi-year regulations: BEIS has confirmed that the regulations will now cover the whole of the next three years (to March 2021) and in fact the draft Regulation for the whole three years was laid into parliament on June 14th. We believe that this will help alleviate the “stop-start” problems that have beset Industry Initiatives in the past, and should pave the way for multi-year funding arrangements.

 

  • Financial assistance with energy bills: As set out in the initial consultation, BEIS has added financial assistance with energy bills as a qualifying activity, up to a cap of £5 million per annum. BEIS noted that several respondees (including ourselves) expressed some reservations about this facility representing a less well-controlled extension of Broader Group to other categories of households and that providing financial assistance (for example emergency pre-payment top-ups) would often go to servicing debt on the meter and thus counterbalance the reduction in the debt write-off cap. We nonetheless welcome the introduction of financial assistance and will be working with our energy company partners to obtain financial assistance for households we encounter through LEAP and ECHO that on many occasions are in severe financial distress.

 

Above all, hats off to BEIS in getting the consultation exercise completed and the Regulation laid before parliament in such a timely manner, notwithstanding the various “distractions” ministers have on their plates at the present time! This now gives the much-needed certainty that will enable all parties to look to “Scheme Year 8” in earnest.

Watch this space for news on the future of LEAP and ECHO.