Two million low-income households miss out on £140 Warm Home Discount in 2020 due to unfair ‘first come, first serve' system

More than two million low-income households are estimated to have lost out on the £140 Warm Home Discount this year[1] because the fixed pot of money available doesn’t cover all those eligible for the scheme, according to new research from Uswitch.com, the comparison and switching service. Furthermore, as the funds are allocated to the broader group on a ‘first come, first served’ basis, those slower to apply can miss out.

The Warm Home Discount is meant to alleviate fuel poverty by providing low-income households with a £140 discount on their energy bills[2]. 

Elderly people on low incomes who receive the Guarantee Credit element of Pension Credit are known as the ‘core group’ and automatically receive the discount, which is coordinated by the Department for Business, Energy & Industrial Strategy. 

Others on income support or other allowances — known as the ‘broader group’ — have to apply to their participating energy supplier over the summer months. The discount is applied to bills between March and September for successful applicants. 

The overall pot of money is £351 million this year, and it is automatically provided to 1.1 million people in the core group — leaving enough funds for 1.2 million in the broader group[7]. 

However, research suggests that if everyone eligible for the discount applied for it this year, about 2.3 million households would have missed out because the pot of money is fixed[1]. There is estimated to be a £325 million shortfall between the amount of funds required and the amount available[4]. 

The Warm Home Discount enters its 11th year in January, with the Government citing the pandemic and its impact on bills and poverty as the primary reason to continue in its current guise[7]. The pot for 2021/22 will rise with inflation from £351 million to £357 million[7]. 

The Government pledged in its Energy White Paper on Monday to expand the pot of money to £475 million from 2022/23, granting support to 750,000 additional people and increasing the discount to £150[8]. However, this means there is still a two-year delay in which an estimated 2.3 million people could continue to miss out. 

Uswitch research has also found there is still a widespread lack of knowledge about the scheme, leading many to miss out. Nearly a third (32%) of people who could be eligible for the discount did not know the scheme existed[6], and more than half (56%) of those in the broader group found the application process difficult[5].

The Government has pledged to consult on providing automatic rebates to people in fuel poverty, and Uswitch.com is calling on ministers to implement this process as soon as possible. 

Richard Neudegg, head of regulation at Uswitch.com, said: “The Government is making the right noises on possible reforms to the Warm Home Discount, but these can’t come fast enough. 

“Ten years on from its launch, both the first come first served nature of the scheme, and its fixed pot of money, look increasingly outdated. The pandemic has thrown this issue into even starker focus, with so many more people finding themselves on the energy breadline and struggling to pay their bills. 

“Many vulnerable people will have missed out on the Warm Home Discount this year, just because they applied later than the 1.2 million people who were quicker to join the queue back in the summer. 

“We now estimate that about 2.3 million households have fallen through the net this year, and this number is only likely to grow as the economic consequences of the pandemic leave an increasing number of people in fuel poverty. 

“We are now calling on the Government to standardise who should be eligible under the broader group and then simplify the process by providing the discount automatically, as already happens with the core group.”

FOR MORE INFORMATION

Ross Stebbing

Phone: 07827 836 709

Email: ross.stebbing@rvu.co.uk

Twitter: @UswitchPR

Notes to editors:

1. Opinium surveyed a sample of 2,000 UK adults from 17th to 19th November 2020. Results were weighted to reflect a nationally representative criteria. Respondents were asked whether they received any of a list of benefits which could make them eligible for the Warm Home Discount. 126 people said they received ‘Pension Credit Guarantee Credit’. 126 / 2,000 x 27.6 million UK households = 1.74 million people who qualify for the core group of Warm House Discount. The BEIS figure for the core group is 1.1 million people. To calibrate the survey figure against the BEIS figure we reduced the estimate by 63.2%. For the broader group, 529 respondents said they received one or more eligible benefits. Subtracting the 126 people in the core group, leaves 403 people. 403 / 2,000 x 27.6 million = 5.56 million. Recalibrating this figure by 63.2% gives us 3.52 million people in the broader group. BEIS figures say 1.2 million people received WHD as part of the broader group. 3.52 million - 1.2 million = 2.32 million who missed out on the WHD.

2. Ofgem: Warm Home Discount (WHD) scheme. 

3. BEIS fixed the amount of money available under the WHD to £351 million in 2020/21. BEIS figures say 1.1 million received the WHD as part of the core group, leaving 1.2 million for the broader group. If all who are eligible for the broader group applied, there would be a gap of 2.12 million people.  

4. 2.32 million x £140 = £325 million shortfall. 

5. Respondents who have submitted a WHD application were asked: ‘How easy did you find the Warm Home Discount application process’. 55.6% of those in the broader group said somewhat difficult or very difficult. 

6. Respondents who are potentially eligible for the WHD in the broader group were asked ‘Have you heard of the Warm Home Discount?’ Of those in the broader group, 31.7% said no. 

7. BEIS: Warm Home Discount Scheme

8. Government’s Energy White Paper  

About Uswitch 

Uswitch is one of the UK’s top comparison websites for home services switching, including broadband, mobiles, SIM Only and insurance. We’ve saved consumers over £2.5 billion off their bills since we launched in September 2000.

In 2022, Uswitch launched its free mobile app, Utrack, to help consumers manage their home energy costs. By connecting to their smart meter, users can track their energy usage hourly, get dynamic insights and calculate potential savings with handy tips. 

Uswitch is part of RVU, a global group of online brands with a mission to empower consumers to make more confident home services, insurance and financial decisions.