Policy paper

CFP comments on consultation: Continuing the Warm Home Discount Scheme

Published 18 December 2025

Applies to England, Scotland and Wales

19 November 2025

The Committee on Fuel Poverty (the Committee) is an advisory Non-Departmental Public Body sponsored by the Department for Energy Security and Net Zero (DESNZ). The Committee advises on the effectiveness of policies aimed at reducing fuel poverty and encourages greater co-ordination across the organisations working to reduce fuel poverty.

The Committee welcomes the opportunity to respond to the consultation on the future Warm Home Discount schemes. The current schemes in England and Wales, and Scotland have been in place since 2022 with the 4-year scheme period running from winter 2022/2023 to winter 2025/2026. The current regulations, Warm Home Discount (England and Wales) Regulations 2022, and Warm Home Discount (Scotland) Regulations 2022 end on 31 March 2026. The Committee provides comments below on the consultation questions, not including those related to Scotland. 

Question 1: Do you agree with our proposal to continue the Warm Home Discount scheme supporting households at risk of fuel poverty for the next scheme period from 2026/27?

Please provide any reasoning / comments / evidence to support your view.

CFP comments:

Yes. The issue of vulnerability and affordability is still acutely felt across the country with the number of households required to spend more than 10% of their income (after housing costs) on energy having just increased to 8.99 million.

However, excluding the Scottish proposals, the proposals for change outlined in the consultation are somewhat peripheral to the deep change needed to address affordability of bills.

Similarly, the proposals do not interrogate some of the key issues of gradations of vulnerability i.e. of cohort, building, community, and transition to net zero. For example, a tiered WHD where the payment amounts vary based on a household’s estimated energy need or cost would better target those with the highest actual energy costs, who are often in the deepest fuel poverty.

Similarly, ensuring that systems, alerts and automation are seamless and easy to use for customers on pre-payment/pay-as-you-go meters, other payment systems remain a hugely problematic area with the rebate still being missed or delayed.

Finally, the all-important issue of the static figure of £150 and its diminishing real terms value remains unaddressed. The relationship with pricing, bill structures and vulnerability assessments is underexplored in the proposals.

Greater clarity would be helpful on the plans to address bill equity. As the WHD scheme is funded by energy bill payers and will cost the average dual fuel billpayer around £37, an increase of £15. This means that the net benefit to households already in receipt of the discount could be reduced, because all households pay the levy cost regardless of whether they are recipients of the discount. This in turn means that the net rebate received by these households is around £15 lower.

For 2025/26 WHD is planned to reach more fuel poor households but as a percentage of total WHD households those that are fuel poor will be lower. In the DESNZ response to this consultation for WHD 2026/27 it would be helpful to hear how WHD will be more strategically aligned alongside other initiatives to the new Fuel Poverty Strategy and how it’s impact might be measured.

Question 2: Do you agree with our proposal to rename the current ‘Core Group 1’ and ‘Core Group 2’ in England and Wales, bringing the existing groups together under one ‘Core Group’? Do you have any views on whether this approach could bring any potential advantages or disadvantages, including practical considerations in delivering the scheme?

CFP comments:

Yes. This appears to be an administrative proposal designed to improve rates of scheme success, with no loss of eligibility proposed.

The approach does not appear to bring practical disadvantages but does not provide any improvement in the scheme’s ability to address more subtle approaches to finding and supporting those in need of more support than others. It does not provide any scope to take a more equitable approach to alleviating the impacts of fuel poverty.

As illustration, ethnicity remains one key lens that is underutilised in terms of targeting. In the English Housing Survey (the basis for the fuel poverty data) households are classified based on the ethnicity of the household reference person (HRP). As noted by the Committee’s 2024 Annual Report, the annual fuel poverty statistics published in February 2024 show that households with an ethnic minority HRP had a higher proportion of households in fuel poverty at 16.6 per cent compared with 12.4 per cent for households with a white HRP. In 2023, the median income for ethnic minority households was substantially lower (median after housing costs equivalised income of £22,847) than the income for households with a white HRP (£29,605). Therefore, the Low Income, rather than Low Energy Efficiency dimension of LILEE, partly explains why ethnic minority households have a higher rate of fuel poverty. In 2023, ethnic minority households were more likely to be living in smaller homes (median of 80m2) than white households (median of 86m2); and were also more likely to live in more energy efficiency properties (median FPEER band 70) than white households (median FPEER rating 68). This led to lower median fuel costs for ethnic minority households, which may explain the lower average fuel poverty gap. From 2010 to 2023 the percentage of ethnic minority households in fuel poverty decreased from 39.4% to 16.6%. In the same period, the percentage of white households in fuel poverty decreased from 20.3% to 12.4%. In 2010 the rate of fuel poverty in ethnic minority households was therefore nearly double that of white households, but in 2023 this gap has reduced whereby ethnic minority households were around 1.3 times more likely to be in fuel poverty.

Question 3: Under these proposals the eligibility criteria established for 2025/26 would be continued for the next scheme period in England and Wales. Do you have any concerns about the impact of this proposal on households, in particular on those with protected characteristics? What concerns do you have? Do you have any suggestions for mitigating your concerns, including through use of Industry Initiatives?

Please provide any evidence you may have to support your answer.

CFP comments:

As above, ethnicity remains a key lens to focus on. In addition, the latest fuel poverty statistics showed that single parent households with children at home were 2 to 2.5 times more likely to be in fuel poverty as a household with person(s) over 60 with no children.  Notably, the lone parent household had a fuel poverty gap of approximately £500 – twice that of any other group.

Evidence from charities and government reports indicate that cold homes contribute to an extra health burden imposed on the NHS; and that children do not thrive to the same extent as other school pupils because of living in a cold home.

In addition, there continues to be an escalating issue around bills, debt and affordability. Industry Initiatives could be steered to address these deep systemic issues. For example, in 2024, there were an estimated 2.73 million households in fuel poverty and debt, and arrears reached a record high of nearly £4bn in the domestic sector. There is insufficient support in existing electricity and gas tariff structures for those in fuel poverty, leading to cost inequity during the transition to net zero. Both the fixed and variable elements of energy bills have risen significantly since 2021, exacerbating financial pressure on fuel poor and vulnerable households. Fixed elements of bills, namely standing charges, are regressive but are also being driven to increase through policies supporting net zero. Therefore, those least able to pay are being disproportionately charged for net zero. The findings also point to increasing divergence between fuel poor households and those more able to access and take advantage of smart time of use tariffs. Incentivising energy use during off peak hours can generate much greater savings in households where smart appliances and significant electrification in the home exists, such as electric vehicles, heat pumps, solar generation and battery storage. This is vastly different in usage and savings potential to a fuel poor household without these goods, who may be self-rationing, and unable to load-shift due to household requirements or working patterns. Currently, the lowest-income 5% of households typically allocate 1.1% of their income to low carbon policy costs, compared to 0.18% for the highest-income group. If a more equitable split of costs for net zero are to be borne by the fuel poor, structural pricing reform would be appropriate.

Question 4: Which of the three options listed above is your preferred option for the next scheme period in Scotland?

CFP comments:

NA

Question 5: Do you have any views on the advantages, disadvantages or concerns of any of the options presented?

CFP comments:

NA

Question 6: Do you have any views about the use of a centralised Warm Home Discount helpline for auto matched Scottish consumers in options 2 and 3? Currently only the Core Group receives helpline support. Q7: Do you foresee any practical challenges or have any delivery concerns with replacing the Broader Group and its application process in options 2 and 3 with a data matched broader Core Group?

CFP comments:

NA

Question 8: Do you have a preferred option for the next scheme period in Scotland that is not presented above?

If so, please provide details.

CFP comments:

NA

Question 9: Do you have any concerns about the impact of these proposals, including the three options as presented, on households, in particular on those with protected characteristics in Scotland? What concerns do you have? Do you have any suggestions for mitigating your concerns, including through use of Industry Initiatives?

Please provide any evidence you may have to support your answer.

CFP comments:

NA

Question 10: Do you think there are advantages or disadvantages in setting out eligibility separately in Scotland?

CFP comments:

NA

Question 11: Do you agree that Industry Initiatives should be continued into the next scheme period?

CFP comments:

Yes. The Industry Initiatives component of the WHD requires suppliers to provide additional support like energy efficiency advice, debt relief, and home improvements. We strongly support increasing the mandatory budget for this element and specifically directing more of that spend towards long-term energy efficiency upgrades (insulation, better heating systems), which would tackle the root cause of high energy bills, not just the symptom.

Question 12: Do you agree that Industry Initiatives should continue to be designed by individual energy suppliers and third-party partners? What are the benefits and drawbacks of this approach?

CFP comments:

Yes, initiatives developed with local insight and through local partnerships with LAs, VCSE, NHS and Housing partners will be more effective and more targeted.

Question 13: Do you have any proposals to improve the design and/or delivery of Industry Initiatives in the future? Do you have any proposals for additional activities that would be of benefit to include as permissible Industry Initiatives in the future?

CFP comments:

The opportunity, as outlined in the responses above is to address issues of bill equity, target household vulnerability, and address fundamental issues of fabric first.

Question 14: Do you have any views on eligibility for Industry Initiatives, or the extent to which energy suppliers should have discretion and flexibility to who they are awarded to within fuel poverty risk groups?

CFP comments:

The Committee has repeatedly emphasised the importance of bringing cross govt data together, at Place and neighbourhood level, to better find and support fuel poor households. These data sets across MHCLG, DWP, DHSC are still not being brought together to help industry usefully target (through AI and other modelling) key SOAs / neighbourhoods / households or vulnerable NHS cohorts.

Question 15: Do you have any views on whether specified activities should be included in the new regulations for the next scheme period from 2026/27? Are there any advantages or drawbacks to their inclusion in your view?

CFP comments:

Yes. Retain and emphasise. This has been an underused (never used!) opportunity to target flexible and responsive initiatives to fuel poor groups / subgroups.

Question 16: Do you agree with the proposals to expand the role of suppliers in the communications around Warm Home Discount? Does this approach raise any advantages, or concerns in your view?

CFP comments:

Of the c7m letters expected to go out this winter, c5m will go to correctly matched, and 2m letters will go to customers where the data match was incomplete.

Whilst suppliers may have more efficient and effective ways of engaging with their customers and are able to use channels unavailable to government, we have some reservations about the take up of the c2m who will need to take further action themselves. More detailed work, along with EQIAs and detailed behavioural modelling is needed to understand how to alert, motivate and support hidden cohorts.

Question 17: Do you have any views on appropriate governance arrangements or oversight to monitor the effectiveness of this approach?

CFP comments:

The key question of where this oversight sits and how it is resourced will be key here. LAs, local HWBs, ICBs etc will not have the stand-alone resources to monitor whether take up is effective locally, and at a national level the DWP etc will need local modelling to be able to assess whether impact is as expected.

Question 18: Do you have any views on the proposed change to how the Warm Home Discount cost is estimated for reflecting in retail gas and electricity prices, moving from an annual spending target set out in regulations to the introduction of estimates of total spend for that coming winter? Do you have any views on how this may work on a practical level for suppliers? If your response is specifically relevant to England and Wales, or Scotland only please make this clear in your reply.

CFP comments:

Producing estimates each year of the total spend for the upcoming winter, based on expected number of households eligible for rebates is a sensible approach – although this will include a further unknown element as the estimate will also include the estimated number of unmatched households. However, it will be critical to develop accurate data to help OFGEM calculate the price cap.

Question 19: Do you have any views on how to determine spending for Industry Initiatives in Scotland if data matching is adopted in place of the Broader Group?

CFP comments:

NA

Question 20: Do you agree, in the absence of data matching, Scottish spending should continue to be determined as a proportion of expected spending in the England and Wales?

CFP comments:

NA

Question 21: Do you agree that Industry Initiatives should be funded to a similar level as currently? Do you have any views on whether their value should be adjusted for inflation during the scheme period?

Question 22: Do suppliers have any views on whether the reconciliation process works as currently organised? Do you consider whether any changes could improve the process?

CFP comments:

We agree that in most cases we would expect this to be a sufficient period for people to contact the scheme; and welcome the proposal that in limited circumstances the Secretary of State should be able to issue a rebate notice after the end of the scheme year as long as they are satisfied that there is evidence that an error has occurred in administration.

Question 23: Do you have any other comments, views or evidence on the proposals for the changes to the levy?

Question 24: Do you have any comments on the proposal for allowing rebates notices to be issued after 1 March (31 March for 2025/26) where the Secretary of State is satisfied that an error has occurred?

Question 25: During the scheme period between 2026/27 and 2030/31, do you have any suggestions on what further improvements or additions to the scheme we could be exploring?

CFP comments:

Schemes developed in isolation and delivered in isolation are limited.

The Committee is keen to see schemes coalesce around better targeting of actual fuel poverty and sharing data across government departments to better understand and address household vulnerability.

The WHD refresh is an opportunity to rethink the ability of this scheme to fundamentally reinforce a shared cross-government mission to reduce fuel poverty,  contributing to the government goal of more citizens living stable, comfortable lives that help them to progress and play a more active part in society. The macro effect of programmes dedicated to upgrading homes, with insulation and, where appropriate, green technologies, is to aid the development of supply chains, skills and sustainable, green jobs in every region of the country.

We are keen to see wider government working together and influencing the design and delivery of schemes. i.e. in its consultation on a new Fuel Poverty Strategy, the government noted an annual cost to the NHS of approximately £860m per year treating illness directly related to cold, damp and mould in homes. Applied and targeted correctly WHD could make a huge difference here. Damp and mould are now a housing priority, embodied in Awaab’s Law (the ‘Hazards in Social Housing (Prescribed Requirements) (England) Regulations 2025) recently laid before Parliament.  The evidence suggests that damp and mould thrive in homes that are not well ventilated and kept at a safe, healthy temperature of at least 180C. Warmer homes, therefore, contribute to the government’s health goal of ending NHS backlogs, by reducing cold-related hospital visits during the winter months. In addition, a comprehensive programme to eliminate cold homes contributes to the energy goals of protecting billpayers and accelerating the UK to net zero.

Question 26: Are there in your view households with particular characteristics that are or will be particularly impacted by changes to the energy sector and how costs feature in bills?

CFP comments:

See answer to Q2 Q3