We welcomed the opportunity to feed into this Department for Energy Security & Net Zero (DESNZ) consultation on expanding the Warm Home Discount (WHD) scheme 2025/26.
Our insights show the need for well-targeted, effective support on energy affordability is abundantly clear. Energy arrears are the most common priority debt that StepChange debt advice clients face – a trend which has persisted for several years, with average energy debt amounts per client increasing over the same period.
In 2024, two in five (40%) of our clients responsible for paying energy bills had arrears at an average of £2,340, and over two in five (42%) of this group had a negative budget – meaning after going through a full debt advice and budgeting session, their monthly income is not enough to cover their basic monthly costs.
What’s more, nationally representative polling StepChange commissioned in January 2025 found that three in ten (31%) UK adults were worried about their ability to pay their energy bills over the next six months, rising to over two in five (44%) of those in receipt of benefits and over half (56%) of those receiving Universal Credit (UC) specifically.
These insights must be situated in a context where typical energy bills continue to sit far above pre-energy crisis averages, while the level of targeted financial assistance available to support those in or at risk of fuel poverty has quite simply not sufficiently kept pace.
We welcomed the Government’s proposals to expand access to the WHD scheme this winter by removing the high cost to heat threshold, so that all households in receipt of means-tested benefits would be eligible to receive the £150 rebate – translating into nearly 3 million more families coming into eligibility this coming winter. Three in five (61%) StepChange clients with energy arrears are in receipt of UC, one of the scheme’s qualifying means-tested benefits – meaning that a notable proportion of our clients who are behind on their energy bills would receive this support under these proposals.
However, the value of the WHD scheme – introduced in 2011 as an annual £120 winter payment, intended to help those living in fuel poverty with their energy costs – has only increased by £30 over its lifetime, and by a minimal £10 since winter 2014/15. Meanwhile, increases in energy costs have far outstripped that increase.
In practical terms, with historically high levels of energy debt in the system following years of high prices and the energy price cap once again on an upwards trajectory, many households will continue to struggle to meet their energy costs – both ongoing usage and any debt repayments – without further, more comprehensive action on both affordability and debt.
We therefore believe it is right that the Government has framed this proposal as an “initial step” towards a greater reduction in fuel poverty for winter 2025/26. More substantial, in-depth options to improve support for those who need it beyond the winter of 2025/26 must be developed and enacted. This includes the implementation and delivery of a nationwide, energy debt relief scheme to tackle historic debt – an intervention StepChange has long been calling for, and which Ofgem is currently exploring – as well as work to drive up standards in the energy debt pathway and bring about long-term, widespread energy affordability.