Warm Home Discount (Amendment) Regulations 2025

Baroness Coffey Excerpts

Wednesday 3rd September 2025 Grand Committee

[Baroness Coffey (Con)]

My Lords, I thank the Minister for presenting the draft regulations before us. I am conscious that this is not her department. Nevertheless, with her Cumbrian background—not just background but experience—she will be conscious of the number of families in fuel poverty, in particular those off the gas grid.

One of the challenges around the warm home discount is that it is focused solely on electricity bill payers, so there are some issues there around aspects of fuel poverty and how it gets distributed. I am conscious that it has generally been a success; I am going to sound a note of caution though. This looks like a potentially generous package. Of course it is: it is the second, if not the third, package brought in by this Government that is very generous to households that receive universal credit. We have seen the extension of free school meals. With the Royal Assent coming through today, we will see a big uplift for everybody who is on universal credit. I think that the Government underestimated how much all this is going to cost, partly in the impact assessment for the Act that has just gone through but also in these regulations. Even now, there are more people on universal credit than it seems has been considered by the impact assessment for these draft regulations.

There is also a different way of thinking about this. These measures are increasing incentives for people not to increase their earnings and to stay on universal credit as long as they can. That is part of what the Government need to think about in these regulations.

There is another oddity here. Changing the criteria will mean the number of households receiving the discount rising from an estimated 3.4 million—around 3.1 million in England and around 300,000 in Scotland —to an estimated 6.1 million, although I think that it will be a lot more and it will, therefore, cost a lot more. People’s average energy bills will go up by about two-thirds, but everybody pays that levy. Consequently, those estimated 3.4 million people will be worse off as a consequence of the rebate now applying to a lot more people. Before, the cost of the levy was estimated at £22. The net effect is £150 minus £22, which is £128. With the average levy now going up to £37 a year, the logical consequence is of that benefit ending up dropping to £113 per household. I appreciate that the finer points may not work out quite like that in some of the calculations, but the Government cannot do this in a very detailed way. So we are in this odd situation where those households with the highest estimated energy costs will get less rebate to help them; I do not understand how that is going to help fuel poverty.

I appreciate, by the way, that the Minister does not have policy responsibility here. I am not sure what sort of response I might get from DESNZ, but it would be quite useful to get some thinking on that.

The reason why I think the costs here have been underestimated is that, in May this year, the UC statistics showed that 6.6 million households were on universal credit, 6.1 million of which are getting payments. That is not simply the transfer from existing legacy benefits to universal credit; there is an element of that, but that number will continue to increase because people are still claiming universal credit. On top of that, there are around 1.4 million people receiving pension credit and around 1.1 million pensioners receiving housing benefit. This is why the figures start to get bigger and bigger. There will undoubtedly be an overlap between the 1.4 million on pension credit and the 1.1 million on housing benefit; nevertheless, this will show, I think, that the costs here have been underestimated. I fear that the levy will, in effect, be higher for other bill payers. It is not the same as the winter fuel payment, because that came from taxpayers—this is coming from every bill payer.

I should also point out to noble Lords, based on a response to an Answer, that there are 200,000 households on universal credit with an income of more than £35,000. They will continue to receive this benefit now. The brilliant DWP—I love it so much—is fantastic at getting the matching. So I would be grateful to understand why DESNZ estimates that 28% of the 8.1 million people it thinks are eligible for this will not receive the warm home discount due to data-matching. Surely more should be done to kick the energy companies. I am concerned that park home residents are excluded. They are a particular group who have a nice life but tend to be on pretty low incomes, but I understand some of the complexities.

I found it astonishing in a different way, although it was perhaps a bit welcome, that there was a 150% uplift of people receiving this in London compared to the rest of the country. That is pretty high, given that more than double the number of households in the south-east will receive this. Clearly, this has not necessarily been done on what might be considered traditional regional adjustments. It is important also, regarding aspects in annexe 5 of the assessments, that the NHS estimates that the preventable costs would be about £540 million. Now the cost on these bills is going up to £1 billion, but I am convinced it will be more like £1.1 or £1.2 billion.

Of course I am not going to try and vote down this instrument, because that is not what we do in the Lords. I wish I had spotted the consultation earlier so that I could have contributed then but, when we come to the post-implementation review of the regulations in a few years’ time, the figures will be telling and Ministers should be looking out for this a lot more quickly. Genuinely, the impact will be that benefits from this levy will decrease, as opposed to increase.

[Baroness McIntosh of Pickering (Con)]

My Lords, I thank the Minister for stepping into the breach and presenting the regulations in the form of the statutory instrument before us. I share and echo the concerns of my noble friend, without going into any great length, who was an excellent Secretary of State at the Department of Work and Pensions at a most difficult time during Covid—a big applause to her and her department at the time, and the work that it continues to do.

I welcome much of the content of the regulations. I forgot to declare my interest as president of National Energy Action and co-chair of the All-Party Parliamentary Group for Water, which will be significant when I come on to smart meters. However, the Whip on duty will remind me that I have said this in the past, so I am going to say it again because I want to record it at every opportunity. I do not know if it is something that the department might look at but, if the noble Baroness is not able to answer today, can she write and place a copy of the letter in the Library? Those households that are most in need of energy, such as in the north of England, Scotland and many vulnerable areas would have qualified for, say, £300, so fewer households would have benefited, but it would have had a much bigger impact on fuel poverty in that regard. Is that something that the Government are minded to look at?

Again, it is not part of these regulations but it is something that National Energy Action would like to place on the record but that I do not necessarily agree with. It would like to see a social tariff. My understanding is that there was a social tariff for energy prior to the warm home discount. I was trying to explain to NEA that you either have one or the other. Social tariffs operate quite effectively in the water sector, but I do not see how we can have both. I presume that that is something that the department under successive Governments has looked at. I should like to find out and have placed on the record for National Energy Action’s benefit what the current Government’s thinking is. Are we going to stick with the warm home discount, which would be my preference, or are we going to have both a warm home discount and the social tariffs?

My more radical thinking, when the Minister was referring to the contents of the regulation and the result of the consultation, was about transforming the housing stock. The Government have granted £13.2 million, not an insignificant sum of money, in that regard. I have a mounting concern that there is housing stock—I see this locally, and I am sure it is in other parts of the country as well—that would benefit from just a bit of an upgrade in having double-glazed windows and maybe a bit of stuff in the wall cavity areas and the roofs to make those houses more habitable. Obviously that would reduce the cost of heating, so it is not going out the window or through the walls, so to speak.

The plan I propose is that we reverse VAT. Take VAT off renovations and put it on newbuild. That way, I argue that it would be neutral. Obviously, it would pass on to the purchasers of new houses, but it would greatly increase the housing stock. Again, that is not in the regulations, but is it something that the Government might consider?

In preparing for today, I am grateful to the Secondary Legislation Scrutiny Committee for its 30th report, where it did a short analysis on this. Its conclusion, as my noble friend Lady Coffey referred to, was:

“We note that the percentage increase in the levy on billpayers and the impact of the expansion of the Scheme on the number of recipients and overall spending are expected to be significant”.


It is no secret that the major parties are deeply concerned about the cost of living crisis, which is ongoing. We have had the higher cost, for those who are not on a fixed tariff, of energy prices going forward for this winter. As my noble friend pointed out, that is going to mean a higher increase for those households that do not benefit to pay for the significant amount of money, which we know to be approximately £1 billion, up from £600 million in the past.

The Government could look at other measures as well. I have long been interested in the possibility of having a smart meter. Anna Walker did a report on water efficiency at the same time as there were the reports by Martin Cave on competition and Michael Pitt on flooding in about 2007 or 2008. Of those three reports, the Walker report on water efficiency never really got any legs. However, she gave very useful advice like, “Don’t run your water when you’re brushing your teeth, but in particular don’t run the hot water because you’re literally putting hot water that you have heated down the system, which is ridiculous”.

Is there a possibility that energy and water would both be governed by the same smart meter? Are the Government aware that currently—my authority for this is the Radio 4 programme “You and Yours”, which I happened to listen to on, I think, Friday—there is evidence that smart meters do not work in rural areas? I know the Minister lives in a deeply rural area. I have been reluctant to fit a smart meter for that reason; there is no point in having one fitted if it is not going to work. Apparently they will give you all these other gadgets to help it work, but still it will not.

If smart meters are not working and people are not able to monitor true energy use then that is one point, but if we were able to develop smart meters that covered both water consumption and energy consumption then that would be a big plus for households. So I give a cautious welcome to these regulations, and I am grateful for the opportunity to make the few comments that I have.

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I hope that I have covered most of the questions asked. As I have said, protecting and supporting those who need it most is a fundamental duty of public service and a principle that guides our approach to tackling fuel poverty. These regulations mark a significant step forward in our commitment to tackling fuel poverty by both expanding the warm home discount to cover more low-income households and ensuring that help is available when it is most needed.

[Baroness Coffey (Con)]

I thank the Minister for her response. There were a few questions, which I believe her officials will have noted. I appreciate that UC and DWP are different, but the Secondary Legislation Scrutiny Committee said that DESNZ assumes that 28% of people will not get this discount despite the other matter. I am sure that the Government will get the other Minister—the one from DESNZ—to reply, but I am grateful to this Minister for her responses so far.

[Baroness Hayman of Ullock (Lab)]

I am sure that we can comb through Hansard and make sure that proper, detailed information is provided to the noble Baroness on the issues that she raised.

This scheme has been running for 14 years now. Over that time, more than £4 billion-worth of direct assistance has been provided to low-income and vulnerable households. These regulations will build on that legacy by allowing support to reach more people this winter, including vulnerable households that were previously shut out of the scheme.