An additional 2.7 million households will receive £150 off their energy bills this winter after the government expanded the Warm Home Discount scheme.
The move follows a recent U-turn on the Winter Fuel Payment, which was only available to those on means-tested benefits last year, but will now be paid to pensioners who have annual taxable income of £35,000 or less.
Announcing the change to the Warm Home Discount, prime minister Keir Starmer said he knew people were “still struggling with the cost of living” and that “extending this £150 energy bills support to millions more families will make a real difference”.
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The change means that anyone on means-tested benefits will automatically see the money knocked off their energy bills, regardless of the size of their home.
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Previously, the payment was limited to those on the guaranteed element of Pension Credit, or those on means-tested-benefits living in a property with a high energy score.
More than six million households will now get the discount, including 1.8 million households in fuel poverty. The energy price cap is also falling by 7% on 1 July, which will mean lower bills for people on variable tariffs.
Dame Clare Moriarty, chief executive at Citizens Advice, said the announcement was “good news for struggling households who haven't been eligible previously”.
However, she added: “But the £150 amount has not kept pace with rising bills and will struggle to touch the sides for families paying off a mountain of debt on top of soaring monthly costs.
“Energy bills are 52% higher than before the energy crisis, prices continue to be volatile, and one in ten households are in energy debt - with the amount owed growing each day.”
Who will be eligible for the Warm Home Discount?
Every billpayer on means-tested benefits will now qualify for the Warm Home Discount, which is worth £150.
So, any criteria about property size, type and home energy score have been scrapped.
In terms of Pension Credit, previously only those who got the guarantee element of Pension Credit, or received the savings element and had high energy costs, were eligible for the Warm Home Discount.
Now, all individuals who are on Pension Credit, and are the named billpayer in their household, will get the Warm Home Discount.
Who pays for the Warm Home Discount?
Energy suppliers pay for the Warm Home Discount across England, Scotland and Wales, but the government sets the criteria for who should receive it.
The rules were tightened under the previous government, limiting the discount to those on the guaranteed element of Pension Credit, or those on means-tested-benefits living in a home that met a “high cost to heat threshold”.
Energy firms take the discount off customers’ bills; so it is not a £150 benefit that is paid to people.
This differs from the Winter Fuel Payment, which is paid directly to people over state pension age who meet the criteria, and is worth up to £300 per household. Cold weather payments, worth £25, are also paid straight into people’s current accounts.
Given that the bill for expanding the Warm Home Discount scheme will be paid by energy companies, it could be passed onto households through the standing charge.
This means customers could see a slight increase in their energy bills to cover this announcement.
Dhara Vyas, chief executive of the trade body Energy UK, said she hoped to see more measures to help households with their gas and electricity bills.
“Energy bills are still hundreds of pounds higher than at the start of 2022 and with customer debt at record levels, we hope to see more measures to help those most in need – by pressing ahead with Ofgem’s debt relief scheme, accelerating progress on a new improved targeted support scheme and looking at other ways to cut bills right across the board, such as moving the policy costs off electricity that currently make it artificially expensive.”
