Around six million low-income households will continue to receive £150 off their winter energy bills after the Government confirmed the Warm Home Discount will run for a further five years, through to winter 2030/31.
The decision follows a consultation on the future of the scheme, which has been in place since 2011. Eligibility was expanded last year to include an additional 2.7m households, significantly increasing its reach. Ministers said extending the scheme would provide ongoing support at a time when living costs remain high, driven largely by energy prices.
How the discount works
The Warm Home Discount is automatically applied as a £150 credit to eligible households’ energy bills, provided their supplier has more than 1,000 customers. Energy companies apply the discount directly, meaning most people do not need to take any action.
The Government also confirmed that around 345,000 low-income households in Scotland will automatically receive the rebate from next winter. This brings Scotland into line with England and Wales, where the discount is already applied automatically. Previously, many Scottish households had to apply separately.
A small number of households may still need to provide extra information to receive the discount for the current winter. Those contacted by letter and asked to call the helpline must do so by 27 February to avoid missing out.
Reaction and wider bill pressures
Charities broadly welcomed the extension, saying it avoids a sudden drop in support for vulnerable households. However, several groups warned that £150 goes only so far given current energy costs.
The Warm Home Discount is separate from the average £150 saving on energy bills expected from April, announced by Chancellor Rachel Reeves in her November Budget. Even with these measures, households will still face pressure from rising prices, and some of the costs are ultimately borne by taxpayers through the wider system.
Energy Secretary Ed Miliband has pledged to reduce average energy bills by £300 by 2030. Critics have questioned whether this target is achievable, particularly after the author of the report underpinning the estimate warned that rising electricity costs could wipe out the projected savings.
Meanwhile, the latest price cap set by Ofgem increased by 0.2% for January to March, following a 2% rise in October.
Funding changes under consideration
Currently, energy suppliers fund the Warm Home Discount through standing charges, the fixed daily fees paid by all customers. The Government is consulting on plans to shift these costs to unit rates, meaning households that use more energy would contribute more to the scheme.
Ministers argue this would be fairer overall and could lead to savings on bills for average consumers, though details have yet to be confirmed. Citizens Advice welcomed the continuation of the discount but warned that changing the funding mechanism could undermine its impact if higher-use households see their bills rise.
The End Fuel Poverty Coalition echoed those concerns, saying the extension avoids a “damaging cliff edge” but risks entrenching a scheme that still fails to reach everyone in need. Industry body Energy UK said it would work with the Government to improve targeting and tiered support.
Responding for the opposition, shadow energy secretary Claire Coutinho said most families would see little benefit and accused the Government of failing to deliver on promises to cut bills.
Separately, Ofgem confirmed new compensation rules for delayed smart meter installations will come into force from Sunday. Eligible customers will automatically receive £40 if installations are delayed or faults are not addressed promptly. More than 70% of homes across Great Britain now have a smart or advanced meter, with over 90% reported to be working correctly.
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