Warm Home Discount (England and Wales) Regulations 2026

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Warm Home Discount (England and Wales) Regulations 2026.

My Lords, these regulations were laid before this House on 2 February 2026. The warm home discount scheme has been a key policy in the Government’s approach to tackling fuel poverty and reducing the energy costs of low-income and vulnerable households, ever since its inception in 2011. Last year the Government expanded the scheme, removing the high cost to heat threshold to ensure that around an additional 2.7 million of the poorest households across Great Britain received a £150 rebate off their energy bills this winter, with nearly 6 million households now eligible. The current scheme period ends on 31 March 2026, and new regulations are required to continue the scheme beyond this date.

In September we consulted on continuing the warm home discount scheme up to and including the winter of 2030-31. The consultation respondents, including consumer and advocacy groups, charities and industry, strongly supported proposals to continue the scheme, and to continue to provide rebates via automatic data matching. Today we are discussing these regulations, as well as some additional changes to the scheme, which allow eligible households across England and Wales in or at risk of fuel poverty to continue to receive the rebate for the rest of this decade.

These regulations will extend the scheme in England and Wales for five more years from 2026, until they expire in 2031. The regulations will continue to oblige energy suppliers with more than 1,000 domestic accounts to participate in the scheme. These regulations will ensure that, as is the case currently, energy suppliers with fewer than 1,000 domestic accounts can choose to participate voluntarily in the scheme.

Under the scheme, participating energy suppliers are obliged to provide support to eligible households through a rebate provided directly to their energy bill, valued at £150. Eligibility for the rebate will continue to be set out by the Secretary of State with an eligibility statement, which is published for each scheme year. Following the removal of the high cost to heat threshold and the expansion of the scheme in 2025-26, the Government have committed to maintaining the current eligibility for the rebate in England and Wales, based on receipt of means-tested benefits, for a further five years.

Eligibility for the scheme remains unchanged but these regulations introduce a more streamlined approach to administration, without impacting eligibility. The existing core group 1 and core group 2 will be merged into one core group in England and Wales, with a view to enabling clearer communication and messaging to potentially eligible households. This change was broadly supported by consultation respondents.

We put out a range of communications ahead of and during each scheme year to eligible households, and will continue to do so for the next scheme period. The automatic data-matching process for the core group in England and Wales will continue, using data held and processed by the Department for Work and Pensions, with the majority of eligible households—typically around 96%—expected to be automatically data-matched, meaning that they will receive the rebate without taking any further action.

My Lords, I thank the Minister for introducing these regulations, which I broadly support. I declare my interest as the honorary president of National Energy Action, from which I am delighted to have had a written briefing.

I have a question for clarification at the outset. A piece on the Government’s website titled “Help with the cost of living in 2026” talks of

“an average of £150 off the costs of energy bills”.

It goes on to say:

“This support is on top of the Warm Home Discount Scheme—a one-off £150 discount off your electricity bill—a total package of £300”.

Do people have to apply separately for the £150 off the cost of living and for the £150 from the warm home discount scheme? The figure cited in the regulations, by the Minister and on the GOV.UK webpage is £150. From memory, I thought the figure for the warm home discount scheme was £350. If that is the case, £350 to help those most in need because they are suffering the most from fuel poverty will obviously go a lot further than £150. I do not know whether that is an erroneous memory on my part, but that is what I remember.

The NEA is concerned—this is my wording, not the NEA’s—about one potential consequence of the regulations. The idea is to lift 1 million homes out of fuel poverty, setting new standards for landlords to meet to help do so. However, as we saw with a recent Bill, whose name I forget, under which landlords were meant to improve housing, in fact they sold it because they simply did not have the means to upgrade it. Does the Minister share my concern that instead of rented properties being upgraded at the cost of the landlord or, potentially, with the help of the Government, the landlords may not have the means to do so and therefore the rented properties will go off the market? That is a very real concern.

My Lords, it is always instructive to follow the noble Baroness. I thank the Minister for his shrewd analytical introduction and his insight. Tangentially, for me, it conjured up memories of chilblains, hot-water bottles and ice on the inside of the windowpanes—the considerable discomforts of a post-war Britain barely out of the VE Day and VJ Day celebrations. It was an era of greyness, rationing and lengthy bus queues—not to mention the frequent and unannounced power station electricity cuts in our ever-cold homes.

These regulations aim to help some 6 million households, with the best part of £1 billion of state money going to fellow citizens. The Minister might be pleased and these regulations are surely to be welcomed in these most uncertain times. Can he say how many Welsh households are in receipt of such moneys? It is the case that Wales is a place of low wages and unusual weather patterns.

Looking at paragraph 5.3 in the helpful Explanatory Memorandum, could there be some clarification, with the help of officials who are here, about automated data matching, the use of automated decision-making and where to find the scheme’s privacy notice? It might be that there could be some answers now or later to those questions.

It is positive that any Government, now and previous, should come forward with such regulations. Warm homes are a mark of a civilised society and caring attitudes. These annual indications are surely to be welcomed. I was approaching the age of 10 in the fiercely cold winter of 1947. The majority of homes in those days had but one warm room. The coal fire was everything. In 1947, the late Manny Shinwell was Minister for Fuel and Power in the Attlee Government—there is a very combative bust of him but a stone’s throw from this Room. General Winter 1947 destroyed Manny’s political career. He just could not move the coal stocks from the railway sidings, so comprehensive was the ever-present Arctic cold and the ever-returning snow. It went on and on.

For the great majority, there was no central heating, certainly no warm homes discount order, which would have been very welcome to the mass of our population. General Winter returned fiercely again in the 1962-63 winter and stayed lengthily. It was April to May before normality returned and soccer programmes could be finalised. There was central heating for perhaps a small majority of the nation then.

As an MP in the Blair/Brown years, I saw pretty well every council house endowed with new doors and windows, add-ons, radiators, extensions and fencing. The 1983 general election was terrifying. The brilliant Environment Secretary, now Lord Heseltine, had instituted the right to buy. Houses that had been bought were instantly smartened up most distinctively. Someone of my political persuasion approaching that door in the general election found the reception hostile and his Lordship did not get that vote.

My Lords, I rise to respond to the Warm Home Discount (England and Wales) Regulations 2026. As we all know, we are at the start of another fossil fuel price crisis, at a time when individuals and the state can least afford it, so bringing down energy bills and speeding up the deployment of renewables must be an absolute national priority. The renewed crisis in the Middle East has once again exposed families and small businesses to the full volatility of the fossil fuel price market. We support the extension of this scheme, but the questions that we want to ask are around its efficiency and its design for the decades ahead. As I said, we welcome the extension of the scheme to 2031 and the improvement in transparency and data sharing that this instrument introduces.

Community matters, as does recognising that fuel poverty remains a persistent, not a temporary, problem. While I appreciate that this scheme was designed and extended before the present crisis, it will need to operate in its aftermath and the continuing process. The regulations fix the core rebate at £150 for the next five years. We all know how dramatically prices can move even in a single winter, let alone over half a decade. Energy markets are in flux at the moment, and these regulations will need to work over a long period of time. What concrete mechanisms will the Government use to review the adequacy of this £150 rebate during the life of the scheme? Are there any circumstances in which Ministers would consider increasing it—for example, if the fuel crisis continues? Without an automatic or at least a clearly defined review process, are we not effectively asking households in fuel poverty to gamble with their warmth in the face of a possible real rise in prices?

Similarly, we welcome the fact that the aggregate non-core spending obligation will rise under this scheme, but it will rise only modestly, from £78 million in 2026 to £84 million by 2030. Taking into account inflation over those years and the levels of fuel poverty at the moment, if the present fuel crisis continues, is there any intention or ability to revisit that non-core spending figure mid-scheme if economic conditions or energy prices continue to accelerate? Do the Government plan to publish an annual assessment of whether the level of support is still adequate in real terms, rather than waiting until 2031, particularly in light of this real change in circumstances?

My Lords, I thank the noble Earl, Lord Russell, for raising the important issue of data. As I see it—but I am happy to be corrected by the Minister—this SI focuses on matching customers, and the data analysis is exceptionally important. It brings our approach to data up to date, because it enables the Secretary of State to direct suppliers to communicate with matched customers identified through automated data matching, and requires suppliers to provide information on eligibility, the use of automated decision-making and where to find the scheme’s privacy notice.

It goes further—again, I welcome this—in replacing annual fixed spending targets with annual estimates reflecting the number of eligible households on qualifying means-tested benefits. As I see it, and this is important and welcome, the SI addresses the need to recognise that data interpretation is not always 100% accurate. The noble Earl, Lord Russell, mentioned the 2%. I hope that was the reason why, under this SI, late rebate notices can be issued after the scheme year in cases where the Secretary of State is satisfied that a customer did not receive the rebate because of an administrative error by a supplier or, indeed, the Government. Data matching is such an important issue and, as it has been raised in the Committee, it would be helpful if the Minister could give us a little more colour on it.

The second point that has come up in conversation today is the question of affordability and whether the £150 warm home discount is sufficient. I was very grateful for my noble friend Lady McIntosh’s comments on that, which I will come to. Maybe the best way to encourage the Minister to respond is to quote from a couple of third-party commentaries that cover this issue. First, the director of policy and influencing at Independent Age, Morgan Vine, stated:

“We welcome the extension of the Warm Home Discount to 2030/31. The older people on low incomes we speak to tell us it is a vital lifeline that goes some way towards keeping their heating on during the coldest months. However, at just £150, the current value of the Warm Home Discount no longer goes far enough, as energy prices remain stubbornly high. We are urging the UK Government to increase the payment to £400 so it better reflects the real cost of heating a home. This increase needs to be delivered via government funding to avoid the cost being put on energy bills”.

The chief executive of Consumer Scotland, Sam Ghibaldan, stated:

“We welcome the UK Government’s announcement of an extension to the Warm Home Discount scheme for the next five years which is positive news for the many households that rely on the discount to meet their energy needs”.

However, he raised a point related to those that have been made by the noble Earl, Lord Russell, and my noble friend Lady McIntosh. He stated that

“while the scheme provides critical support there are deficiencies which remain unaddressed including cliff-edge eligibility which means households just outside the qualifying criteria receive no support despite potentially struggling to meet essential energy needs”.

The reason why these points are worthy of consideration and response from the Minister is that my noble friend referred to the Government’s promise to reduce household energy bills by £300 a year, yet as it stands these bills are some £73 higher than they were when the Secretary of State took office after the election. Energy generation in Great Britain is already some of the cleanest but, crucially, the most expensive in the western world. We need to recognise that the cost of our energy is critical in this area. That is why the points made by my noble friend were apposite, and I hope that the Minister will be able to respond to them.