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.