Consumer Scotland has warned of “stark deficiencies” in the Warm Home Discount Scheme (WHD) and is recommending a range of reforms to improve it in both the short and longer term.
The scheme currently takes £150 off winter electricity bills for those on low incomes – with some consumers in Scotland getting the discount automatically while others need to apply though their supplier.
Energy affordability and debt continue to be pressing concerns for Scottish consumers and Consumer Scotland research shows 16% of Scottish households struggle to keep up with energy bills, while 15% are in debt or arrears - up from 9% the previous year.
Consumer Scotland supports the continuation of the WHD scheme from 2026/2027 given the ongoing need for financial support during winter, a legacy of energy debt and rising bills.
However, while the scheme provides critical support there are significant deficiencies which remain unaddressed under the UK Government’s latest proposals including:
- Cliff-edge eligibility means households just outside the qualifying criteria
receive no support, despite potentially struggling to meet essential energy needs - The flat-rate discount means there is no link with energy consumption,
disadvantaging households with unavoidably higher usage, such as those with complex medical needs or terminal illness - Falling value in real terms with the discount rising only 25% since 2011 while
typical annual energy bills have risen 57% over the same period
Consumer Scotland has recommended a number of reforms to benefit consumers in Scotland in the shorter term including:
- Scottish Government and UK Government work together to ensure all eligible consumers in Scotland receive the payment automatically – as happens in England and Wales - to ensure consumers don’t miss out
- Ensuring the date of payments coincides with winter when consumers need it the most – current support can arrive as late as March
- Extending the dedicated helpline to consumers in Scotland to check their eligibility as happens in England and Wales
- Ensuring the UK and Scottish governments effectively communicate any changes to consumers in Scotland
Consumer Scotland has also set out fundamental longer term reforms.
Under the current approach, eligibility is based on receipt of means-tested benefits, but this excludes many households who are fuel poor, but do not qualify for benefits.
Groups at risk of exclusion include disabled and terminally ill consumers, low-income working families earning just above benefit limits, rural and remote island households reliant on expensive fuels and older housing stock and older people with modest pensions.
As a result, Consumer Scotland is recommending a transition to an eligibility model based on household income and expenditure as well as household circumstances including disability, rurality and young children which could lead to greater essential energy use.
This information, combined with energy use data from suppliers, would enable more precise targeting and ensure support reaches those who need it most.
Barry Coughlan, head of Energy for Consumer Scotland, said: “Deficiencies in the scheme are well-known, so it is disappointing that action has not already been taken to address them and it is unlikely to be possible to resolve these problems in time for the commencement of the next scheme year.
“We have recommended a series of measures that will improve access to the Warm Home Discount for consumers in Scotland in the short term, but much more fundamental reform is needed including a better targeted set of eligibility criteria taking account of energy consumption, energy efficiency and household characteristics.
“Our research has shown that government and industry-held data is currently insufficient to do this, so work is needed to get it into a position where it can help target fuel poverty support at households that need it.
“However, both the UK and Scottish governments and the regulator Ofgem should commit as a matter of urgency to developing a strategy to ensure future affordability support can be effectively targeted through the recommendations we have set out.
“We also want governments and the regulator - working with consumer groups and industry - to review the performance of the WHD more regularly than is currently the case to ensure its effectiveness in reducing fuel poverty.”
Background
Consumer Scotland has set out its recommendations in a response to a DESNZ consultation on continuing the Warm Home Discount Scheme.
Consumer Scotland is the statutory body for consumers in Scotland and is the levy-funded body for energy consumers in Scotland.