The Government intends to introduce a new Warm Home Discount scheme in April 2011 to tackle fuel poverty. Energy companies will be required to provide a discount on electricity bills to a ‘core group’ of low income pensioners. Suppliers will also be required to provide the same discount to a ‘broader group’ although they will have discretion over which of their consumers receive the discount.
The Government estimates that by 2014, two million households in Britain will receive the discount at a cost of £310 million per year or £12 per household. About 25 per cent of fuel poor households in England will be eligible for the scheme, based on 2007 data.
Consumer Focus welcomes the Government’s initiative but considers the ‘core group’ should include a wider range of households. Specially commissioned research by Consumer Focus shows that low income families and disabled people, as well as pensioners, are particularly vulnerable to fuel poverty. We therefore propose that low income pensioners, families and disabled people automatically receive the discount.
Under our proposal we estimate that by 2014, three million households in England will receive the discount at a cost of £440 million per year (about £510 million for Britain) or £19.75 per household.
About 40 per cent of fuel poor households in England will be eligible for the scheme and between 32 and 44 per cent more fuel poor households will be removed from fuel poverty than under the Government’s proposal.