Response to the Warm Home Discount Scheme consultation - May 2016
Our response to this consultation will set out some general analysis of our clients’ experience of fuel debt and is based on evidence, research, analysis and insights gained across 23 years of providing free debt advice.
The Warm Home Discount Scheme was introduced in April 2011 to provide support with energy bills to vulnerable people on a low income. The Department of Energy & Climate Change’s consultation asked for suggestions on how the scheme could better target the most vulnerable households and make it easier for them to claim.
Our opinion on the Warm Home Discount Scheme
The number and proportion of people we have seen with gas and electricity debts has grown in recent years. However, our evidence suggests that the Warm Home Discount Scheme is not well targeted at supporting the large group of people vulnerable to fuel debt and fuel poverty. Many families with children and households receiving working-age benefits miss out on the scheme’s rebates because they do not know about them or are not eligible. We want to improve awareness and take up of the scheme and to see it better targeted at more low income households in fuel poverty.
Summary of our consultation response
We recommend extending the eligibility and market coverage of the Warm Home Discount Scheme from April 2017. We recognise that this would require an increase in overall funding for the scheme but would ensure that it was better targeted at those most vulnerable to fuel debt or poverty.
We support the proposal that the Government share information to raise awareness and improve take up of the scheme amongst people most vulnerable to fuel poverty. We also recommend that this type of data matching should be associated with an obligation on all energy suppliers to provide the Warm Home Discount Scheme. This would prevent the current situation where customers lose their entitlement to a rebate if they switch to providers who currently don’t deliver the scheme.
Currently the scheme can support projects to reduce or cancel debts for household electricity or gas supply as part of a package of measures aimed at supporting customers in fuel poverty. Our evidence shows that people with fuel debts are more likely to have other financial difficulties, suggesting energy debt advice needs to be linked with more general debt advice. We recommend the scheme includes a separate and additional activity around supporting independent debt advice for those in fuel debt.
In addition to such debt assistance schemes there is still a need for good debt recovery and forbearance practices from the energy companies. We have evidence of a real need for a clear offer of breathing space for people in financial difficulties who are stepping up and taking responsibility for their debts. 60% of clients we surveyed said that their financial situation stabilised once all of their creditors agreed to freeze further interest, charges and enforcement action. But no clients said their financial situation had stabilised in cases where none of their creditors had agreed to give them this help.
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