“Autumn Statement 2013”
#AceNewsServices says following the recent “Autumn Statement” the UK Government has replied over the latest changes to ” The Warm Home Discount Scheme” set-up in 2011 for our Elderly and Vulnerable adults. Of course as with all changes they start of telling us how much they have spent, what they have done for people and also blowing their own trumpet.
As you read through the changes and click any highlighted links you will notice that at the very end it gives a list of all respondents in Annexe A and they are all energy companies, double glazing companies and businesses. It finally adds ” One private individual” no name and no pact drill.
Says it all: This is how it is at present just click link and PRINT
Anyway added a poll to this post with four simple answers 1. Agree 2.Disagree 3.Do Not Understand 4.My View
BACKGROUND:
“Keep Warm This Winter”
The Warm Home Discount began in April 2011 and provides assistance annually to around 2 million low-income and vulnerable households in Great Britain. The assistance is currently provided by the seven largest energy suppliers, each of which has over 250,000 domestic customer accounts. The main focus of the scheme is on electricity bill rebates and this winter over 1 million households have already received £135 off their bill.
The scheme has annual spending targets and the spending target for 2013/14 is £300m. If expenditure on the scheme is above or below the annual spending target, the target for the following scheme year is adjusted accordingly.
“Wrap Up Warm This Winter”
The largest element of the scheme is the Core Group, a subset of people receiving Pension Credit Guarantee Credit. Participating suppliers have to provide specified electricity bill rebates to all their Core Group customers, identified through matching energy supplier data with Government-held data. However, suppliers do not have to pay all customers eligible for other parts of the scheme – known as the non-core spending. On the basis of our estimate of how many people will qualify for the Core Group each year, we estimate how much non-core spending suppliers have to carry out in order to meet the annual spending target. This year we estimated that Core Group spending would be £200m in 2013/14. Given a total spending target of £300 million we therefore notified Ofgem in February that the non-core spending obligation should be £100m. Ofgem then informed suppliers of their individual non-core spending obligations.
Since setting the non-core spending obligation, we have established that the number of people receiving the qualifying benefit for the Core Group is much lower than the original forecast used to estimate Core Group spending. If we did nothing, then scheme spending would likely be
£266m this year with a consequently higher spending target next scheme year (£344m rather than £310m). This would have a negative impact on fuel poverty this scheme year and potentially create delivery and compliance problems next year. Therefore, we wanted to enable a solution which would result in higher non-core spending this year than the original obligation we set.
” Get What You Are OWED”
The Warm Home Discount began in April 2011 and provides assistance annually to around 2 million low-income and vulnerable households in Great Britain. The assistance is currently provided by the seven largest energy suppliers, each of which has over 250,000 domestic customer accounts. The main focus of the scheme is on electricity bill rebates and this winter over 1 million households have already received £135 off their bill. The scheme has annual spending targets and the spending target for 2013/14 is £300m. If expenditure on the scheme is above or below the annual spending target, the target for the following scheme year is adjusted accordingly. The largest element of the scheme is the Core Group, a subset of people receiving Pension Credit Guarantee Credit. Participating suppliers have to provide specified electricity bill rebates to all their Core Group customers, identified through matching energy supplier data with Government-held data. However, suppliers do not have to pay all customers eligible for other parts of the scheme – known as the non-core spending. On the basis of our estimate of how many people will qualify for the Core Group each year, we estimate how much non-core spending suppliers have to carry out in order to meet the annual spending target. This year we estimated that Core Group spending would be £200m in 2013/14. Given a total spending target of £300m, we therefore notified Ofgem in February that the non-core spending obligation should be £100m. Ofgem then informed suppliers of their individual non-core spending obligations. Since setting the non-core spending obligation, we have established that the number of people receiving the qualifying benefit for the Core Group is much lower than the original forecast used to estimate Core Group spending. If we did nothing, then scheme spending would likely be £266m this year with a consequently higher spending target next scheme year (£344m rather than £310m). This would have a negative impact on fuel poverty this scheme year and potentially create delivery and compliance problems next year. Therefore, we wanted to enable a solution which would result in higher non-core spending this year than the original obligation possible that they could spend more and subsequently reduce their non-core spending obligation for 2014/15.
The Consultation:
We received 12 responses to the consultation and the respondents are listed at Annex A. We had discussed the issue and the proposal with participating suppliers and Ofgem prior to publishing the consultation.
What respondents said:
We asked two questions in the consultation:
Q1. Do you agree with the proposal to change the Warm Home Discount Regulations to allow suppliers to spend up to 34% more this year on the non-core elements of the scheme, thereby reducing next year’s obligation by a corresponding amount? All 12 respondents supported the proposal to allow suppliers to spend up to 34% more this year on the non-core elements of the scheme thereby reducing their obligation for next scheme year by a corresponding amount. However, several responses to this question went beyond the proposal in the consultation. In particular, the main focus of responses from suppliers was on the potential delivery problems they may face in 2014/15 as a result of a significantly higher Broader Group spending requirement.
Some suppliers highlighted that increasing the scale of spending on the Broader Group would add considerable cost to their administration and verification processes, and thus impact consumer bills. One supplier was concerned about the impact of delays and on-going changes to Universal Credit on suppliers’ ability to find and verify Broader Group customers. In view of these concerns, several suppliers asked Government to consider further changes to the scheme. There were three changes proposed, each of which would require further amendment to the policy: raising the spending cap on industry initiatives; increasing the value of the rebate and increasing the size of the Core Group.
- Raising the spending cap on industry initiatives Several respondents felt that the current spending cap of £30m on industry initiatives should be raised. They argued that industry initiatives provide a scalable approach to addressing the underspend which would be more cost-effective to deliver than identifying additional Broader Group customers. Their view was that this would ensure vulnerable customers will receive financial assistance sooner, rather than later.
- Raising the value of the rebate Some respondents felt that raising the value of the rebate offered to Core Group and Broader Group customers should be considered to offset the Core Group underspend and to make delivery easier in 2014/15.
- Increasing the size of the Core Group.
A proposal from several respondents was to broaden Core Group eligibility criteria. Again, the key aim would be to increase Core Group spending in year 4 of the scheme and thereby reduce the non-core spending obligation. One respondent asked that Government consider ways of increasing the uptake of Pension Credit, for example funding an awareness campaign. A significant proportion of people believed to be eligible for Pension Credit do not claim it, thereby also missing out on a Core Group rebate. Other issues, less focused on short-term changes to the scheme Regulations, were also raised in responses. A key concern for some suppliers was the impact of finding and verifying more Broader Group customers. One supplier raised a concern on impact of the ongoing changes and delayed introduction of Universal Credit on Suppliers’ ability to find and verify Broader Group eligibility. Some respondents suggested that wider data-sharing powers to identify and verify eligible
Broader Group customers would reduce costs and speed up verification and eligibility processes. One respondent also included a suggestion that Government consider ways to use communications about the scheme to attract more Broader Group customers.
Finally, several energy suppliers requested that Government improved its forecasting of Core Group spending in order that an issue of this magnitude does not arise again.
Q2. If you are a participating energy supplier, please indicate how much extra spending above your current non-core obligation you expect to carry out this scheme year? Please indicate if you would like this information to be confidential. Whilst some suppliers have indicated their intent to extra spending above their current non-core obligation, they were not able to provide a forecast. Two suppliers, British Gas and Eon, have indicated spending above their current non-core obligation. British Gas estimates overspending by 10% while Eon estimates an additional
15,000 Broader Group rebates above their obligation.
A proposal from several respondents was to broaden Core Group eligibility criteria. Again, the key aim would be to increase Core Group spending in year 4 of the scheme and thereby reduce the non-core spending obligation. One respondent asked that Government consider ways of increasing the uptake of Pension Credit, for example funding an awareness campaign. A significant proportion of people believed to be eligible for Pension Credit do not claim it, thereby also missing out on a Core Group rebate. Other issues, less focused on short-term changes to the scheme Regulations, were also raised in responses. A key concern for some suppliers was the impact of finding and verifying more Broader Group customers. One supplier raised a concern on impact of the ongoing changes and delayed introduction of Universal Credit on Suppliers’ ability to find and verify Broader Group eligibility. Some respondents suggested that wider data-sharing powers to identify and verify eligible
Broader Group customers would reduce costs and speed up verification and eligibility processes. One respondent also included a suggestion that Government consider ways to use communications about the scheme to attract more Broader Group customers. Finally, several energy suppliers requested that Government improved its forecasting of Core Group spending in order that an issue of this magnitude does not arise again.
Q2 If you are a participating energy supplier, please indicate how much extra spending above your current non-core obligation you expect to carry out this scheme year? Please indicate if you would like this information to be confidential. Whilst some suppliers have indicated their intent to extra spending above their current non-core obligation, they were not able to provide a forecast.
Two suppliers, British Gas and Eon, have indicated spending above their current non-core obligation. British Gas estimates overspending by 10% while Eon estimates an additional 15,000 Broader Group rebates above their obligation.
Annex A.
List of respondents to the consultation
Energy suppliers
British Gas
EDF
EON
RWE Npower
Scottish Power
Scottish and Southern Energy
Other
Office of Gas and Electricity Markets (Ofgem)
Energy Action Scotland
Energy UK
Islington Council
Glass and Glazing Federation
One private individual
Related articles
- Ofgem: Suppliers largely doing well on Warm Home Discount (energylivenews.com)
- UK energy firm fined for selling ‘free light bulbs’ in Ireland (irishtimes.com)
- Press release: Government action to help hardworking people with energy bills (gov.uk)
- Ministers To Fund £300m Energy Bill Rebates (news.sky.com)
- Ofgem lumps E.ON with £3m fine after it illegally sells lightbulbs (blueandgreentomorrow.com)
- Chancellor urged to break up Big Six energy firms (energylivenews.com)
- Policy: Helping households to cut their energy bills (gov.uk)
- Ofgem to investigate energy firms for missing home efficiency targets (guardian.co.uk)
- Green tax: will your energy supplier cut your bill? (telegraph.co.uk)
