Addressing Fuel Poverty Through a New Warm Homes Support Scheme

Today, we have launched a new report on fuel poverty from energy consultants BFY Group. This is the most comprehensive review of fuel poverty in Great Britain since the energy crisis and shows the depth of the issue, as well as proposing recommendations to better target existing support, and how to deliver even better outcomes with additional support.

This follows an event we held in Parliament yesterday, where we briefed MPs on the report findings. Thanks to our local MP Andy Slaughter MP for hosting the event, and to the Chair of the Energy Security and Net Zero Committee Bill Esterson MP for speaking at the event alongside our Co-Founder Simon Oscroft.

This comes a week after Ofgem confirmed the Price Cap will rise again for Q2 2025, with average bills now 18% higher than they were in September. With wholesale prices on the rise, and energy debt at record levels, now more than ever, we need long-term solutions to better identify and protect those in fuel poverty before next winter. We hope this new report contributes to this important policy debate.

Key findings include:

- 5.4m households (20% of all households in Great Britain) as being in fuel poverty, 1.2m more than the latest official estimates from the Government.

- Existing Government schemes to tackle fuel poverty – the Warm Homes Discount (WHD) and Energy Company Obligation (ECO) – are not targeted effectively, missing up to 4m homes (or 74%) who meet our definition of fuel poverty (energy spend being more than 10% of a household’s income after housing costs have been deducted).

- Looking at WHD specifically, only ~45% of the £500m spent on the scheme every year, goes to households meeting the definition (see graphic below). This emphasises the need for a new targeting system – the current use of means-tested benefits misses too many households that are in fuel poverty.

- Better targeting of these schemes could reduce the fuel poverty gap by 10% or £300m per year. Alternatively, without removing support from existing recipients, all fuel poor households could receive the annual WHD £150 payment by increasing the existing levy on customer bills by just £21 per year.  

The report calls on the Government to explore how a new targeted bill support scheme could be designed at little or no extra cost to the exchequer to provide deeper, tiered support to those most impacted by fuel poverty. Replacing existing schemes with what we have called a Warm HomesSupport Scheme – would require £2.8bn of additional funding a year (equivalent to c.£100 per bill payer) and could reduce the fuel poverty gap by £2.2bn or 75% and take 3m households out of fuel poverty.

CEO and Co-Founder of So Energy, Simon Oscroft said:

“Last week the Government confirmed they plan to almost double the number of households receiving the Warm Home Discount payment next winter. Our report shows the Government needs to significantly increase the coverage of support, so this move is welcome. But given how badly the existing Warm Home Discount scheme is currently targeted, missing three-quarters of households that are in genuine fuel poverty, they must identify the right households, otherwise it will be a terrible waste of money and effort.”

Managing Partner of BFY Group, Ian Barker said:

"Fuel poverty remains a critical issue that suppliers cannot tackle alone, so urgent government action is needed. Energy bills are still ~60% higher than pre-crisis levels, customer debt has hit a record ~£4bn, and the Price Cap is expected to remain above £1,800 throughout 2025 – following another increase from April. With 1 in 5 households in fuel poverty, and three-quarters of these households receiving no government support, we hope this report sparks serious discussions on delivering meaningful relief before next winter."  

‍

View the full report here: https://bfy-group.files.svdcdn.com/production/WarmHomesSupportScheme-BFYGroup-SoEnergy.pdf

‍