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Government eyes three year extension to Scotland’s Warm Home Discount

The consultation is on the Warm Home Discount in Scotland. Image: Pixabay

The consultation is on the Warm Home Discount in Scotland. Image: Pixabay

The UK government has launched a consultation on expanding the Warm Home Discount in Scotland while enabling more energy suppliers to take part.

This consultation includes a proposal to lower supplier participation thresholds, mirroring how the scheme operates in England and Wales. This would enable more suppliers to participate from 2023/24 in particular.

The proposals would also see the scheme extended by £13 million and three years, meaning it would run until 2025/26, which the government said would provide “much needed certainty to those most in need”.

The extensions would mean rebates are provided to an additional 50,000 families in Scotland each year, the government said, with 230,000 already receiving payments and boost cash paid out to help meet energy costs from £140 to £150.

With household energy bills rising as a result of changes to the price cap stemming from consistent high power prices, the UK government unveiled in February it would be providing households with an effective loan of £200, which is taken off energy bills upfront and then recouped from future bills.

Sunak also announced an expansion of eligibility for the Warm Home Discount in February which saw three million more vulnerable households become eligible for the scheme.

The need for intervention in energy bills has been stressed across the sector, with suggestions ranging from a windfall tax on north sea oil and gas producers to moving green levies into general taxation and cutting VAT on bills and low carbon technology.

The last of these was enacted by chancellor Rishi Sunak in March, when he announced a reduction of VAT on solar panels, heat pumps and roof insulation from 5% to zero for five years.

An expansion of the Warm Home Discount has also been called for by a number of industry organisations to help tackle the energy crisis, including the REA, Resolution Foundation and E.ON.

The Warm Home Discount in Scotland is to continue to focus support on those in receipt of means-tested benefits such as Universal Credit and Pension Credits. However, energy suppliers can use additional eligibility criteria if this criteria identifies households at risk of fuel poverty, subject to approval from Ofgem.

Earlier this year, the End Fuel Poverty Coalition found that 8.5 million UK households face fuel poverty as a result of increasing energy bills, particularly this winter when the price cap is once again expected to rise.

The government said that households in Scotland are benefiting from an additional £296 million of support for the cost of living, including help for high energy costs and a record block grant of £41 billion per year for the next three years.

UK government minister for Scotland Malcolm Offord said: "We are acutely aware of how many Scots are worried about the rising cost of living and, where we can help, we are doing just that.

“Rebates of £150 through the Warm Home Discount will help to directly address the issue of fuel poverty for a quarter of a million Scottish households."

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