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Warm Home Discount Regulations 2011

My Lords, I beg to move that the Committee has considered the draft Warm Home Discount Regulations 2011. These regulations build on the voluntary agreement negotiated by the previous Government with energy suppliers. I applaud them for bringing forward the primary legislation in the Energy Act 2010, which has allowed us to make this scheme a reality. For over five years, the numbers of households in fuel poverty has risen. It is estimated that in 2010, 4 million households were living in fuel poverty in England. The Government are committed to tackling fuel poverty and supporting low-income and vulnerable consumers to heat their homes affordably. The warm home discount scheme enabled by this instrument will help this to happen. We are aware that fuel poverty is an issue that is best tackled via many angles, not just one. That is why there are four proposed elements to the warm home discount scheme. The first is the core group. A specified financial benefit of at least £120 per annum will be provided to households in receipt of certain elements of pension credit. Receipt of pension credit guarantee credit, which goes to some of the poorest pensioners, is one of the best ways to identify this group. We consider this group to be at high risk of fuel poverty. Over half of all fuel-poor households contain someone over 60, and over 80 per cent are in the lowest three income deciles. The second group is the broader group. The same financial benefit specified for the core group will be provided to a broader group of households, who are fuel poor or vulnerable to fuel poverty. We have specified a number of state benefits that energy suppliers could choose from to identify those eligible for broader group support. Suppliers would also be able to propose additional criteria for approval by Ofgem, which would target support at those in or at risk of fuel poverty. The third group involves the legacy spend. This will give a smooth transition from the voluntary agreement, which is an agreement that has been in place for the past three years between the Government and energy companies. It provides financial assistance to vulnerable consumers but the agreement ends this month. The amount of spending by suppliers on these legacy forms of support will decrease over the course of the scheme, as the amount of spending on rebates for the core and broader groups increases. The warm home discount scheme builds on the success of the voluntary agreement, and allows the Government to provide stronger support for the people who need it. Lastly, there are the industry initiatives. Suppliers will be able to fund some activities in addition to the provision of direct financial support, which will benefit households in or at risk of fuel poverty. The scheme regulations detail which forms of support can be funded and include activities that improve targeting of the available support or those that provide energy advice to consumers. Through the scheme, those participating energy suppliers will provide support worth up to £1.1 billion over the next four years. But we must ensure that the resources we have are used effectively to tackle the problems underlying fuel poverty. On 14 March, the Secretary of State launched an independent review of the fuel poverty target and its definition, led by Professor John Hills. Our intention is that suppliers’ contributions to the policy will be proportionate to their market share. Further regulations will be laid to allow a reconciliation mechanism to guarantee this, should the House support these scheme regulations. Subject to support from Parliament for the data-matching regulations due to be tabled later this year to help identify the core group, we estimate that around 2 million low-income and vulnerable households will be assisted by the scheme annually. On that basis, I commend this instrument to the Committee.