The Warm Home Discount

The Warm Home Discount (WHD) is a UK Government initiative to help low income and vulnerable households with energy costs. The scheme was initially worth up to £1.13 billion over the four year period to March 2015 and aimed to help around 2 million low income and vulnerable households in Great Britain annually. In November 2015, as part of the UK Government's Spending Review, the Scheme was extended to 2020-21

The Department of Energy and Climate Change (DECC) is responsible for the Warm Home Discount policy and legislation. Ofgem’s role is to administer the scheme and to monitor the energy suppliers’ compliance with their obligations under Warm Home Discount. However, the funding came from the participating energy suppliers. The UK Government committed to additional spending of £320 million on the Warm Home Discount Scheme in 2015-16

Amendments came into force 12 March 2015 after the Government consulted on ways to make the scheme more effective. Core group eligibility criteria was retained but compulsory standard criteria was introduced for the broader group. In addition, a provision of a rebate to eligible park home residents as well as additional groups of customers who may be at particular risk of living in fuel poverty was included in the list of approved Industry Initiatives activities.

There are three elements to the scheme:

  • Core Group

Support is targeted at the households of less well-off pensioners.  Vulnerable customers identified by a data-matching process with the Department for Work and Pensions receive an automatic annual rebate on their electricity bill.  For Winter 2015-16 the discount will be £140.

  • Broader Group

In addition to the Core Group, suppliers are required to provide an annual rebate to a wider group of customers who are fuel poor or in a group at risk of fuel poverty. Eligibility for these customers is set by suppliers themselves, but approved by Ofgem under the Warm Home Discount regulations.

  • Industry Initiatives

The Industry Initiative element enables suppliers to provide assistance, beyond direct financial support, to customers in fuel poverty or at risk of fuel poverty.

The Warm Home Discount originally only applied to electricity accounts, but as of 23 July 2016, energy suppliers can now provide the option to pay the rebate on a gas bill rather than the electricity bill.

Warm Home Discount Scheme in Scotland

With the Scotland Act 2016, additional powers to determine how supplier obligations in relation to energy efficiency and fuel poverty, such as the Warm Home Discount, are designed and implemented in Scotland will be devolved. Responsibility for setting the way the money is raised (the scale, costs and apportionment of the obligations as well as the obligated parties) will remain reserved.

The Act transfers executive competence to Scottish Ministers to empower them to design and implement supplier obligations in Scotland. This is achieved through amendments to the Gas Act 1986, Electricity Act 1989 and Energy Act 2010 (the 2010 Act). This new legislation is expected to come into force in 2017-18.

Reporting

For a review of progress see the most recent report:

Warm Home Discount Scheme Annual Report: Scheme Year 5

 

For More Information

GOV.uk - DECC

WHD Website - Ofgem