Andy Burnham's government has been urged to extend the Warm Home Discount to millions more households as fears grow that energy debt across Great Britain could reach £7 billion by the end of the year. The call comes as domestic energy debt and arrears climbed by about £500 million over the past year to a record £6 billion at the end of June, according to the trade association Energy UK.
The amount of energy debt left unpaid for longer than 30 days is likely to accelerate to £7bn by the end of the year, Energy UK said. The regulator is expected to confirm later this week a 4% increase on the energy price cap for millions of households from October.
Energy UK calls for targeted permanent solution
Dhara Vyas, chief executive of Energy UK, said “too many households continue to feel the strain of high energy bills”. She urged the Labour Party leader’s government last week to consider a “targeted and more permanent” solution to the rise in energy bills rather than rely on “stopgap, ad hoc or emergency measures”.
As it stands, people receiving means-tested benefits are entitled to the one-off £150 Warm Home Discount over the winter. Energy UK said the Warm Home Discount reached six million customers, but there were another 2.5 million who needed help because a medical condition or draughty home meant they consumed more energy.
Proposal to combine income, health and energy data
Energy UK said if the Labour Party government would allow the combining of information about customers' income, health and energy consumption, a discount scheme could offer targeted and adjustable support, and respond to changing needs and price levels. The trade body argues this approach would address the fuel poverty gap more effectively than current arrangements.
Adam Scorer from the NEA said the Warm Home Discount has risen by only £10 over the last decade. “We desperately need a new approach,” he said. “There will be a lot of detail to get right, but if government genuinely wants to provide breathing space for people in fuel poverty, it needs to take this challenge on and work with energy companies and charities to design something truly fit for purpose.”
Current arrangements 'fail to provide the help needed'
“The current arrangements fail to provide the help needed and work out more costly,” Vyas said. “A social discount will address the fuel poverty gap and provide the right amount of support to the right households at the right time – reflecting that needs vary across different customers.”
The proposed social discount would be designed to respond to changing needs and price levels, offering a more flexible approach than the current fixed £150 payment. Energy UK’s recommendation comes as the energy price cap is set to rise by 4% from October, adding further pressure on household budgets already strained by the fallout from the Iran war.
