We know we have a duty to help our customers manage these higher costs and we have a wide array of assistance on offer. We provide manageable payment plans, energy efficiency advice and access to government programmes that can help households with their bills.
One of the key programmes open to customers is the Warm Home Discount (WHD). I’m sure many of you reading this will be well acquainted with the scheme. However, for those less familiar; the WHD is a government scheme, administered by energy suppliers including SSE, offering eligible customers a £140 discount on their energy bills.
The scheme is open to two types of household; the ‘Core Group’ and the ‘Broader Group’. Customers in the Core Group are proactively notified and given the discount. A limited number of customers can also apply as part of the Broader Group if they or their partner is in receipt of certain benefits, is chronically sick or is disabled.
The WHD is a mainstay of government energy policy and has helped millions of customers across the country. This year alone around 300,000 SSE customers will receive the discount. While we recognise that the scheme does not necessarily address the root causes of fuel poverty, we believe that it offers valuable support to vulnerable customers. SSE has repeatedly called for it to be extended so these households can continue to benefit and we welcomed the government’s commitment to continue the scheme until 2021. However, this doesn’t mean we don’t believe improvements can be made.
Under the current system the onus is on Broader Group customers to apply for the discount, increasing the chance of them missing out. There is also a cost involved with processing and verifying the applications, increasing the cost to SSE and ultimately our customers.
We believe a more clearly defined eligibility criteria for the Broader Group would enable eligible customers to be more easily identified and automatically receive the discount, just like the Core Group. This would make sure the available money goes to those customers who need it most and it would significantly reduce administration costs.
The way the scheme is funded also needs examining. As it stands a levy is applied to the bills of all customers of the obligated suppliers, which is then distributed and used to fund the WHD. This is the same process used to fund the majority of energy bill-funded government programmes.
Unfortunately, this effectively amounts to a flat tax applying to all bill payers, regardless of their ability to pay (including, incidentally, those receiving the discount). We strongly believe that social policies, such as this, should be funded progressively through means-tested taxation so that only those who can afford to pay would pay, and those on lower incomes are protected.
These are just two of the potential improvements we believe could be made to the scheme. We have been encouraged by the direction of travel and it’s particularly welcome to see progress towards greater data matching through the Digital Economy Bill. We hope to see this have an impact on any scheme due to start in 2018.
The WHD has undoubtedly done a lot of good for customers. We just want to make sure it works as well as possible and as many households as possible get to benefit from it. We’ll continue to work with both UK government and Scottish government, who will have powers from 2018 to design their own scheme, to develop enduring schemes for 2018-2021. We look forward to seeing a bit more policy certainty across this period so our customers can also have a clearer idea of the support they will receive.