Warm Home Discount

With your permission, Madam Deputy Speaker, I would like to make a statement about the action we are taking to protect families in the face of the global spike in gas prices. In recent months, wholesale gas prices have risen to their highest level in two years. They are up nearly 15% compared with the previous price cap period. As a result, this morning Ofgem announced the energy price cap will rise by around £9 a month between April and June. We know this will be unwelcome news for families across the country that are already worried about their bills, but as Ofgem’s chief executive officer, Jonathan Brearley, said today,

“our reliance on international gas markets leads to volatile wholesale prices, and continues to drive up bills”.

This week marks three years since Russia’s invasion of Ukraine, and once again the British people are paying the price of our country being exposed to fossil fuel markets controlled by petrostates and dictators. The truth is that every day we remain stuck on gas is another day families, businesses and, indeed, the public finances are at risk from these kinds of price spikes. That is why sprinting to home-grown, clean energy is the only way to end our exposure and our vulnerability as a country. In the meantime, we are determined to do all that we can to protect people, and today I want to set out the measures we are taking.

First, we want to provide greater help to the most vulnerable in time for next winter. The warm home discount currently gives around 3 million families a £150 rebate on their energy bills. The current system provides help to those on means-tested benefits, but excludes millions of people in homes not classified as hard to heat, as a result of criteria introduced by the last Government in 2022. These criteria are seen by many as arbitrary and unreliable, and they mean there are families in almost exactly the same circumstances with some receiving help and others not.

Today, we have announced that we will consult on proposals to abolish this restriction, meaning all households receiving means-tested benefits would be eligible for bills support next winter—from 3 million families in the current system to more than 6 million with our proposals—so that one in five families in Britain would get help with their bills through this scheme, including an additional 900,000 families with children and a total of 1.8 million households in fuel poverty. This Government are determined to do everything in our power to help people struggling to pay their energy bills and support the most vulnerable in our society.

Secondly, because of our exposure to fossil fuels, the cost of living crisis saw bills rocket to £2,500 and families plunged into unstable debt—debt that continues to accumulate today. In the system we have inherited, every bill payer pays for managing this debt burden. We are determined to act on behalf of those in debt and all the bill payers who are paying the costs of it. So we are working closely with Ofgem to accelerate proposals on a debt relief scheme that will support households that have built up unsustainable energy debt through the crisis and have no way of paying it. This will be an important first step to cut the costs of servicing bad energy debt, and under these plans the target would be to reduce the debt allowance paid by all bill payers to pre-crisis levels.

Thirdly, we know that one of the best answers to high bills is upgrading homes so that they are cheaper to run, so we will shortly announce the details of around £0.5 billion pounds of funding under the warm homes local grant and £1.3 billion under the warm homes social housing fund to invest in home upgrades over the coming years and cut fuel poverty. In all, up to 300,000 households will benefit from upgrades in the next financial year through our warm homes plan—whether it is new insulation, double glazing, a heat pump or rooftop solar panels—which is more than double the number supported in the last financial year. We will also ensure that landlords invest in energy efficiency upgrades that will make homes warmer and bring down costs for tenants, lifting up to 1 million people out of fuel poverty, so that we are doing everything we can to ensure people have the security of a home they can afford to heat.

Fourthly, we are clear that we need a regulator that fights for consumers. That is why we have called on Ofgem to use its powers to the maximum to protect consumers by challenging unlawful back billing, taking action on inaccurate bills, driving the smart meter roll-out, giving every family the option of a zero standing charge tariff so they have more choice in how they pay for their energy, and ensuring that compensation is given for wrongful installation of prepayment meters. We are moving forward on our review of Ofgem to ensure it has the powers it needs to stand up for consumers and clamp down on poor behaviour by energy companies.

This set of measures shows a Government willing to use all the powers at our disposal to help protect consumers. However, important as these measures are, I must stress to the House that there is no proper solution to rising energy bills while this country remains exposed to the rollercoaster of fossil fuel markets. That is why this Government are moving at speed to deliver clean power by lifting the onshore wind ban in England, consenting nearly 3 GW of solar, setting up Great British Energy, delivering a record-breaking renewables auction, making it easier to build the next generation of new nuclear power stations, and getting on with the job of implementing the reforms to the planning system, the grid and renewables auctions set out in our clean power action plan.

I have to report to the House, however, that despite the importance of this mission and the fact that we are running it, we continue to receive representations from Opposition parties not to speed up, but to slow down and to reject solar power, reject onshore wind, reject offshore wind and reject new transmission infrastructure—representations that, if accepted, would leave us more vulnerable and more insecure, with the British people paying the price. Let me tell the House that we will reject those representations. We know that every solar panel we put up, every wind turbine we build and every piece of transmission infrastructure we construct makes us more secure, and every time the Conservatives oppose those measures, they double down on their legacy of leaving this country exposed and the British people deeply vulnerable.

This Government will do whatever it takes to stand up for working people now and in the future—protecting families and businesses from the consequences of global events, driving forward our plans to bring down bills for good and doing everything in our power to support those most in need. I commend this statement to the House.

I call the shadow Minister.

I thank the Minister for advance sight of her statement. Today, the Government have announced an expansion of the warm home discount, with a change to the criteria that will see more low-income households receive a £150 payment to heat their homes, but for many this payment will be immediately eaten up by the increase in the energy price cap. We must be clear that the best protection for vulnerable households is to prioritise cheap energy. The announcement today is, frankly, a sticking-plaster approach to rising energy bills.

This Government fail to grasp the core issue: energy costs in this country are far too high for businesses, industry and, of course, bill payers. When the energy price cap rose in 2022, the now Secretary of State called it a “national emergency”. He called for an urgent freeze on energy bills and cited a lack of leadership. Now that he is in government, the only thing he is able to freeze is vulnerable pensioners by taking away their winter fuel allowance with no notice. Does the Minister think that shows leadership? I know that my constituents, and presumably hers too, will be concerned about their bills rising, concerned about inflation creeping back up—hitting 3% in January, despite the hard work done last year to bring it under control—and angry that Labour’s promise to cut bills by £300 is being broken.

The worst part of all of this is that this Government, led by ideological zealotry from the Secretary of State, are doubling down. Their obsession with going further and faster than any country in the world to meet their own self-imposed 2030 target is going to increase people’s bills even further. The renewables industry has warned that their rush to build record renewables in the next five years will push up prices and “consumers will lose out”. The Government’s rush to build twice as much grid in the next five years as was built in the last decade will increase the network costs on people’s bills. The Office for Budget Responsibility has said that the environmental levies will increase to £14 billion in 2030, largely driven by the hidden cost of renewables, all of which will end up on people’s energy bills.

The hon. Gentleman is right that energy prices are too high—on that, we agree. We also agree that that is worrying for families and businesses across the country. However, I would point out that 80% of this rise has been driven by wholesale prices. I would also gently remind him that the reason we are in this position—the reason we are so exposed to global fossil fuel prices over which we have no control—is because the Conservatives spent 14 years in government squandering the opportunity to accelerate the transition to clean power and reduce our dependence on global fossil fuel prices, leaving families across the country exposed.

The status quo is not tenable. We are at a point where energy prices are at an historic high, and we got here under his Government. That is a status quo that we are not willing to contend with. That is the reason—not because of ideology, but because we see the obvious: as long as we are dependent on global fossil fuel prices, we will be on this rollercoaster. That is what is driving the push to clean power. While the Conservatives have no alternatives, we have a clear alternative: we run to clean power; and while we do that, we support the most vulnerable households in the short term.

To answer the shadow Minister’s question, Ofgem is in the process of consulting on the debt support scheme as we speak, and we will support it to put that in place. We know that the debt burden has increased by £3.8 billion, and more than 1.8 million households in need of help will be supported by that scheme. We are absolutely committed to cutting bills—everything we are doing as a Government is driven by that desire and clear commitment. We will do that both through short-term measures and, critically, by running at clean power by 2030.

We have a plan to deal with energy bills. The Opposition have a plan to slow down and do nothing, and it will be the British public who pay the price.

It is clear that the Conservative party left this country dependent on global fossil fuel supplies, which both burn the planet and are damaging in terms of price controls. However, the Tories left something else as well: a rigged energy market, which gave £480 billion to the energy industry yet left 8 million households—probably 17 million people—in fuel poverty, spending more than 10% of their income on energy.

It is therefore welcome that the Minister has today announced an additional £150 for the warm home discount, but that, as I understand it, is a one-off payment for next winter. A £150 one-off payment will not resolve the underlying problem—today, the regulator has increased the cap by £111 or £108, depending on how it is calculated, per year on an ongoing basis. I welcome the Government’s announcement and recognise the Minister’s commitment to changing the way that things work. However, will my hon. Friend confirm to the House that the Government intend to end this rigged market, which works in favour of the profiteers, and tackle the scourge of fuel poverty, while at the same time securing a just transition to clean energy?

My hon. Friend is absolutely right. We have an energy market that does not work sufficiently in the interest of consumers, and we are committed to turning that around. That is why we are reforming the electricity market, why we are trying to drive forward a shift from fossil fuels to clean power, and why we are putting in place the review of Ofgem, to ensure that customers and consumers are at the very heart of everything we do in the energy market. This is an important step to supporting households in the short term. We took action this winter, with up to £1 billion of support through Government and industry to help the most vulnerable customers, and the measures announced today will ensure that we will provide support next winter. However, it is not the end of our ambition; it is the start of our ambition to reform the energy market.

I call the Liberal Democrat spokesperson.

I thank the Minister for advance sight of her statement. It is deeply troubling that we remain so reliant on the foreign gas markets and that, as a result, vulnerable people in this country will see an increase in their bills.

I completely welcome the proposals to expand the warm home discount. No one should have to choose between heating and eating—we all know that. However, the reality is that we have to get beyond that issue and reduce consumption, instead of just handing public money to our energy giants. The Lib Dems have been calling for a 10-year emergency home insulation plan for a long time, and it was disappointing that the amendment tabled to the Great British Energy Bill by my hon. Friend the Member for South Cambridgeshire (Pippa Heylings) was not taken up, so I would be grateful if that could be looked at again in any other scope.

What timeline can we expect for the upgrade of building standards for new homes and the decent homes standard for existing properties, so that people are not having to consume as much electricity and gas? Until all homes are properly insulated, what progress has been made on requiring all energy companies to sign up to a single social tariff, paying particular attention to the pensioners left cold after the removal of the winter fuel allowance?

I was contacted by Michael from H2-ecO, a company that does lots of retrofitting, who told me about the home upgrade grant, affectionately known as HUG, which is ending in March, when it is due to be replaced immediately, with continuity, by the warm homes local grant. The company was told on Friday that it will not be continued, and that there will be a pause—five weeks before the scheme ends. People have been told that they would be able to pre-register, but now they are told that there will be a pause. They asked me to tell you that they are concerned that they will lose their contractors [Interruption.] Sorry—not you, Madam Deputy Speaker, but the Minister. I apologise.

Order. You have two minutes for your contribution, and you are just over that. If you could come to a conclusion, that would be great.

I absolutely will, Madam Deputy Speaker. They asked me to ask you—sorry, they asked me to ask the Minister what guarantee can be offered that the scheme will open immediately, and not be slowed by reviews, and when will you set out your long-term plans before 2026?

When will you set those out, Minister, since I will not be responding at the Dispatch Box?

The hon. Lady is right that insulating and upgrading people’s homes is the route by which we will reduce bills and deliver homes that are warmer and cheaper to run. That is why we are absolutely committed to the warm homes plan. Rather than there being a pause, we are running at this.

Next financial year, 300,000 homes will be upgraded, which is double the number in the previous financial year, and that is just the start for our warm homes plan. We are working with colleagues in the Ministry of Housing, Communities and Local Government to bring forward the future homes and buildings standards. Critically, we have spoken to industry, installers and local government, and we are acutely aware that there should and cannot be a hiatus. We are moving forward with the local grant and the warm homes social housing scheme to ensure that there is not one. I ask the hon. Lady to write with the specifics of that scheme, because we are trying to design it to stop that.

Critically, on the social tariff, we are clear that clean power is the route by which we will bear down on energy costs in the long term, but that we will need to support the most vulnerable customers as we get there. There are different ways to design a social tariff, and we are looking at options for how to support the most vulnerable at the moment, and the warm home discount is a key part of delivering that.

I call Luke Murphy, a member of the Energy Security and Net Zero Committee.

Many of my constituents, like others across the country, will be concerned about the increase in their energy bills announced today. I therefore welcome the Government’s extension of the warm home discount, as well as the measures to tackle unsustainable debt and push the regulator to do more to support consumers.

I must say that the shadow Minister talks as if his Government left a legacy of low energy prices, when it was his Government who left an appalling legacy of high energy prices. I have stood in both this Chamber and Westminster Hall and heard shadow Ministers attack renewables and electric vehicles—do they not realise that they are attacking the very means of bringing down the cost of energy? Does the Minister agree that our clean energy mission and renewables is the fastest way to ensure we end our dependence on volatile fossil fuels, which also leaves us at the mercy of Vladimir Putin?

I thank my hon. Friend—that was well said.

The Conservative party left us with the highest energy prices that we have seen in a generation. That is a legacy that, quite frankly, should see them hang their heads in shame. Rather than criticising us for trying to unpick and deal with their legacies, I would strongly caution them to support our action. [Interruption.] It is their legacy!

My hon. Friend is right: the way that we get out of this bind, left by and inherited from the Conservative party, is through clean power, delivering renewables that we know are cheaper and clean power by 2030. My hon. Friend is right; the Conservative party continues to be misguided. Thankfully, we are in the driving seat.