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Two million households miss out on Warm Home Discount

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Written by: Emma Lunn
16/12/2020
The scheme’s ‘first come, first served’ system and fixed funding has left many low income households out in the cold.

Uswitch calculated that more than 2 million low-income households didn’t get the £140 Warm Home Discount this year despite being eligible.

Under Ofgem rules, elderly people who receive the Guarantee Credit element of Pension Credit (called the ‘core group’) automatically get the discount, but others on income support or other allowances (the ‘broader group’) have to apply for the cash.

Households need to be signed up to a participating energy supplier to apply and make the application during the summer, with the discount applied to bills between March and September for successful applicants.

But if all of the broader group applied this year, not every household would receive the financial help. The pot of funding available is fixed by the Department for Business, Energy and Industrial Strategy at £351m – but this isn’t enough.

This week the government has pledged to review the scheme but people on low incomes could continue to fall through the net without automatic enrolment across all qualifying groups, according to Uswitch.

The price comparison website’s research found that more than half (56%) of those in the broader group found the application process difficult, and a third (32%) didn’t even know the money was available.

Uswitch estimates there is a £325m shortfall between the amount of funds required and the amount available.

The government pledged in its Energy White Paper earlier this week to expand the pot of money to £475m from 2022/23, granting support to 750,000 additional people and increasing the discount to £150.

However, this means there is still a two-year delay in which an estimated 2.3 million people could continue to miss out.

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from its launch, both the first come first served nature of the scheme, and its fixed pot of money, look increasingly outdated.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.”

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