More than 2 million low-income households are estimated to have lost out on the government’s £140 ($186) warm home discount scheme this year because the fixed pot of money available doesn’t cover all those eligible, according to a study. A lack of awareness about the scheme was also found to be a concern.
A study by Uswitch, which lets users compare deals on services such as energy and broadband, said funds are being allocated on a first come, first served basis, which means those slow to apply can miss out.
Elderly people on low incomes who receive the ‘Guarantee Credit element of Pension Credit’ are known as the ‘core group’ and automatically receive the discount, which is dealt with by the Department for Business, Energy and Industrial Strategy.
Others on income support or other allowances — known as the ‘broader group’ — have to apply to their energy supplier over the summer months. The discount is applied to bills between March and September for successful applicants.
The overall pot of money allocated to the scheme is £351m this year, and it is automatically provided to 1.1 million people in the core group, leaving enough funds for 1.2 million in the broader group.
However, research suggests that if everyone eligible for the discount applied for it this year, about 2.3 million households would have missed out because the pot of money is fixed.
Uswitch estimates there is a £325m shortfall between the amount of funds required and the amount available.
The government said in its Energy White Paper earlier this week that it would expand the pot of money to £475m from 2022/23, granting support to 750,000 additional people and increasing the discount to £150.
However, this means there is still a two-year delay in which about 2.3 million people could continue to miss out on the discount.
Uswitch research has also found there is a widespread lack of knowledge about the scheme.
Nearly a third (32%) of people who could be eligible for the discount did not know the scheme existed, and more than half (56%) of those in the broader group found the application process difficult, it said.
The government has pledged to consult on providing automatic rebates to people in fuel poverty, and Uswitch is calling on ministers to implement this process as soon as possible.
Richard Neudegg, head of regulation at Uswitch, said: “We are now calling on the government to standardise who should be eligible under the broader group and then simplify the process by providing the discount automatically, as already happens with the core group.”
“Ten years on from its launch, both the first come first served nature of the scheme, and its fixed pot of money, look increasingly outdated. The pandemic has thrown this issue into even starker focus, with so many more people finding themselves on the energy breadline and struggling to pay their bills,” he added.
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