A very warm welcome to this eighth inquiry session for the pensioner poverty inquiry. It is an absolute pleasure to welcome Anthony Pygram, Peter Smith, and Simon Francis. It is lovely to see you all. Perhaps you could start by introducing yourselves and your organisations.

I am the co-ordinator of the End Fuel Poverty Coalition, which is made up of over 100 charities, campaign groups, and some local authorities and is supported by academics campaigning to end fuel poverty.

I am Peter Smith, Director of Policy and Advocacy at the charity National Energy Action. We are a fuel poverty charity that works across most of the UK, but we work closely with our sister organisation, Energy Action Scotland.

I am Anthony Pygram, a member of the Committee on Fuel Poverty, which is an advisory non-departmental public body advising on the effectiveness of policies aimed at reducing fuel poverty and encouraging greater co-ordination across organisations. Working to reduce fuel poverty, our remit is England, with fuel poverty being a devolved matter.

Thank you very much and a very warm welcome to you all. I am going to kick off and then we will have some more questions for you. Can you explain how pensioners in fuel poverty have managed this winter, and what we can expect to see that may be different in the coming winter this year?

You have heard evidence already from charities that have painted a very bleak picture of how pensioners have suffered. We highlight the research from Age UK showing that 35% of pensioners earning under £20,000 said that their home was cold most or all of the time. We talk about how hidden fuel poverty sometimes is. Pensioners in particular are bad at coming forward and admitting, even to their own relatives, that they are struggling. You can imagine a situation where a pensioner puts on heating when their family comes around to make it look like nothing is a problem, when it actually is. We are concerned about the health impacts. Medact, the health campaign charity, found that 75% of frontline health workers see housing-related illness regularly and 45% of frontline health workers have discharged patients into housing that they know will make them ill again. It is staggering that health professionals have to do that. It is difficult to assess the impact because it is difficult to see health data. We encourage the ONS, the Department of Health and others to report more regularly on the health impacts for people living in cold, damp homes, for instance, by sharing admissions data. Taking ONS data for December, January and February and comparing winter 2024-25 with winter 2023-24, there was an increase in the number of deaths in the whole population but a much greater increase in the number of deaths among those aged 75 and above. Comparing one winter with the last, there was a total of 3,359 additional deaths in 75-plus-year-olds. That was despite average temperatures not dropping below what we would normally see as being dangerous levels. Energy prices for the average household were 10% lower this winter than they were last winter, but even incorporating what might be considered trend data, you are probably looking at around, 100 to 650 pensioners who died over and above additional trends for those aged 75-plus. That is the impact. You can ask what else has changed. The only thing that was different was that some pensioners were paying more for their energy and their energy bills were higher than they had ever seen in their lives. We see people self-disconnecting, living in cold, damp homes, suffering as a result and, ultimately, the figures show that sadly there was an increase in the number of people who died last winter.

Thank you, Simon. Peter, do you want to add to that?

I agree with a lot of those observations, tragic as they are. As an advice provider, National Energy Action has had direct contact with hundreds of pensioners over the course of this winter and has heard a pretty familiar story about impacts on both physical and mental health. The typical trend—this is supported by some of the data that you are publishing today—has been for people to ration their energy use, often to the point where it becomes dangerous for their health and wellbeing. Energy rationing, sadly, is endemic. We did some polling in March with YouGov, which suggested that 50% of households across the population in Great Britain are considering or have considered turning down their heating below the point at which they would like to have it. We know that these impacts are tragic not only for those individuals but for our health services. It puts massive pressure on already stretched public services at a critical time of year.

The key thing to remember here is that energy prices are a lot higher than they used to be. They are about one and a half times what they were before the gas crisis arising from the Ukraine conflict. The price will probably go down slightly in the next week or so, but you are still talking several hundred pounds more than it used to be. As others have said, the way a pensioner reacts to that, probably more than other demographics, is to not use energy in order to save money. Pensioners do not like being in debt. Research shows that very few pensioners think that they are in arrears to their energy supplier. They avoid that, so we get the health disbenefits and the health problems. Energy prices are not going to go down anytime soon. This is going to be an enduring problem.

Thank you. Can I invite comments—as brief as possible—specifically on the Government’s steps to reduce energy costs and improve energy efficiency? When do you think that that is realistically likely to take effect and make a difference to the cost that people have to pay for their energy?

Ultimately, we don’t know because we don’t know how much the Government are planning on investing in the warm home plan. We have heard the figure of £13.2 billion, which was promised in the manifesto. There have been rumours in The Financial Times and Politico that that figure is under some threat and scrutiny. If we do not get the full funding going into helping people, the energy efficiency measures will not be delivered, and people will end up having to continue to pay more for their energy.

In a welcome way, energy efficiency measures are already delivering huge benefits. They have offset for the beneficiaries some of the worst impacts of this energy crisis and the prolonged impacts since. Whether or not that trend could be sustained and, in particular, whether future efforts are going to be sufficient to meet our statutory targets on fuel poverty is very much bound up in the conversation that Simon was starting about the spending review. However, we are hopeful that action is being taken in the private rented sector and that coherent plans are coming forward within Government. However, we are anxious and keen to see the detail.

The best way to reduce levels of fuel poverty is by having houses that are well-wrapped, so they do not use as much energy. We have seen a long and steady decline in fuel poverty due to improvements in energy efficiency, but over the last five years, 2019 to 2024, that has flatlined. We are not seeing that change very much. We look forward to seeing what the Government’s review of the fuel poverty strategy, their review of the minimum energy efficiency standards in the private rented sector and the warm home plans do to regain momentum here.

Sticking with you, Anthony, your Committee said last year that targeted support would remain important and necessary for the foreseeable future. What do you mean and why and what would need to happen to change that assessment?

For those in fuel poverty, the average gap between affordable bills and what they have is around £400 a year. That is across the population of people in fuel poverty. It fell slightly in 2024, but consumers are still carrying about £3 billion in debt. Either we reduce the amount of energy people use by stepping up energy efficiency and the rate of home insulation to cut bills and/or reduce the price of energy or we find mechanisms to boost incomes so people can afford the extra amount that they have to pay. There is no indication that energy prices are going down over the next few years. If anything, moves to net zero will keep prices high and potentially even raise them. Until everyone has a well-wrapped house and can use less energy and/or has a higher income, you are going to see this continuing problem. Energy efficiency measures have pretty much flatlined. That is why we think fuel poverty is going to go on for a while yet.

Does anybody else want to comment on that?

On the future of bill support, I do think it is important to stress the preference towards direct support to reduce energy bills. We talked about the tendency for pensioners in particular to ration their energy use and, sadly, energy is one of those things that gets traded out in the household budget. Unless there is direct support to directly reduce bills, often if you provide people with cash supplements, they will spend that money on servicing debt, and other essentials such as food, and it is unlikely to go on the energy bill. It is vital that any support that is available does go directly towards energy bills and there are mechanisms to do that.

Sticking to that point—we can bring in others—to what extent do we currently have an effective and coherent package of support targeted for those in fuel poverty, particularly our pensioners?

There are a lot of schemes out there. One of the things that we probably all—not just the charities—widely agree on is that we need a more comprehensive, targeted bill support scheme, called the social tariff, a unit rate discount so that we help people who are vulnerable and reliant on it. We need to remember as well, when we talk about the definition of fuel poverty, that the Government’s definition at the moment is narrow and is being consulted on. Figures from Jonathan Bradshaw and the University of York show that around 3.2 million pensioner households are likely to be struggling with their energy bills and that 964,000 pensioner households are in deep fuel poverty. That means that they are paying more than 20% of their household income just on energy. That is not taking into consideration that people are cutting back and should be spending more potentially to keep themselves warm. We need to see a rounded approach to providing support for the people in fuel poverty.

I would say that there are clear actions that look to target the main drivers of fuel poverty. Looking at incomes, we are talking quite a lot today about the winter fuel payments. There are also cold weather payments, but they have not gone up almost since they were first introduced. On prices, there is the warm home discount scheme, but that has only been increased by £10 in the last decade when energy prices, I think, since 1 April 2021, have gone up by about £700. On energy efficiency, sadly, resources are not sufficient to meet the statutory requirements, which are very clear in law. There are elements of a plan and actions and programmes that can tackle the main drivers, but they are not sufficient for the job at hand, particularly in the aftermath of the energy crisis.

What would you like to see in addition?

Part of the problem is support is not very well targeted. Until last winter, the winter fuel payment went to all pensioners, irrespective of whether they needed it. The people who needed it to get needed more because if you have a fuel poverty gap of over £400, in rural areas over £700, getting £200 will help, but it will not solve things. The hit rate for energy efficiency schemes is typically less than 50%, so less than 50% of the recipients are the people it is aimed at. For me, better targeting is key.

Any other final comments before I move on?

One thing that we will probably touch on again later, but it is worth saying now, is that automation is also really important, particularly when we are dealing with income-related support or support that can take money off bills. The more that can be auto enrolled and done without households opting in, the better. We know that, particularly in the pensioner population, claiming can present a lot of challenges, so we want to give people the confidence to come forward and claim support. We have seen that generally with the push on pension credit, where a lot of effort has been put in, particularly recently, to try to get pensioners to come forward for what is a very generous package of support. However, there are cultural barriers and other unidentified barriers that prevent people from coming forward and claiming that support. The more that we can do to automatically enrol people, the better.

Focusing particularly on the winter fuel payment, which is back in the news—if it ever fully left it—what do you feel the impact has been of the decision to drastically reduce access? Simon, do you want to start?

I will not repeat that, yes, obviously there has been a massive impact. The significant difference for pensioners this year, compared with previous years, has been the removal of the winter fuel payment, and we think that has driven quite a lot of problems. There was a lack of time for pensioners to prepare for the decision that was coming in, a lack of consultation with anybody about that decision, and a lack of foresight, not warning any of the charities that work with older people to ramp up services. Our members spent time working on the pension credit uptake campaign and helping with that. That was a huge amount of effort that we needed to repeat almost every year. Also, apart from the decision itself, there are three other problems, which are the threshold being set too low; the taper, there is a cliff edge and people even £1 over on income will not get any support at all; and the targeting must include disabled pensioners and those who are on non-means-tested benefits and, as we have heard, the amount itself is too low. If the amount of the winter fuel payment were keeping track with the rise in energy prices, it would be £550.

I agree with that and with the earlier remarks about rationing. Also, it prompted a huge amount of uncertainty about people’s outgoings, and at a difficult time. This was a time when there were rumours afoot that energy prices were going to surge again—as they did—and we have seen three successive price increases since that announcement. That backdrop scared people. They were generally fearful about how they were going to make do. Remember, last winter came off the back of three successive winters of people really, really struggling. All their financial resilience had ebbed away, people had largely gone through their savings, so it was difficult for them. Faced with all of that, people could only cut back. That is what we have seen, and the consequences that we have outlined.

The basic idea of targeting is good but, as others have said, there are people just above that threshold who suffered a lot last winter, and there are perhaps 800,000 people who are eligible but do not claim pension credit and who lost out. There are a lot of losers there who we have to worry about.

Coming back in very briefly, I was reading our living experience library case study on someone who missed getting the allowance by £2.50. I think you have had evidence to the Committee that £9,000 is the overall quantum of support that a person can get if they are eligible to be on pension credit, and yet someone has missed that by £2.50.

As you say, a cliff edge. In Scotland, the Government have taken a different course. They have a £100 payment, which partially mitigates. Can you see any contrast or difference between the impact in Scotland and the rest of the UK?

I don’t think the Scottish payment has not come in yet. It is still to come through. We will wait and see. It will obviously be welcomed by the households that did miss out. The Scottish Government could also have looked at the fuel insecurity fund, which was very successful during the height of the crisis and would have provided support. They could have also made sure that local authorities were equipped, and we may come on to the household support fund and the consequentials there. We also need to see that.

This is not a comment on England or Scotland, but Northern Ireland, where we know the impact there has been bad. There were already endemic levels of fuel poverty in Northern Ireland, many more households were reliant on heating oil, for example, the cost of which has fluctuated hugely and continues to fluctuate, and there is a far greater propensity to pre-pay, even for pensioners who typically in GB are not on pre-payments as much. The impact has been acute in Northern Ireland and we are very conscious that the support being talked about at the moment for this winter—the Government are setting it out, which is very welcome—is reliant on a GB-wide mechanism, the warm home discount scheme, which does not apply in Northern Ireland, so there is a particular gap there that will need to be plugged. It is a very urgent conversation in Northern Ireland. Northern Ireland’s programme of government is clear that more action needs to be taken in Northern Ireland to tackle fuel poverty and that they need the support of the UK Government.

I won’t comment on Scotland, thank you.

The Department chose not to make a full impact assessment prior to this decision. Do you think there is a case for evaluating the impact now for future policy? If so, what would you expect it to look at? For example, should it include wider impacts, such as on health and social care services, and how could it practically do that? It is a multiple question. I am trying to get it all in. Can you do that in 30 seconds?

Yes, absolutely, it should do, and it should look at the wider impact across health and social care. Especially, let’s hear from doctors and frontline health professionals as well, about the impact of this. Let’s hear from people who are working on the ground, social workers, and make sure that we get a full picture of what happened. Also, they did publish that limited assessment about how it was not going to increase fuel poverty rates all that much, but they were looking at the wrong numbers. They were looking at the low-income, low-energy efficiency measure, and not looking at the broader income measures, such as the figures that I read out from the University of York. So, yes, look at the broader picture and don’t just look within that narrow definition.

It is a bit trite to say better late than never. It would be good to have that assessment, but I would like to see one in the round talk about the winter pressures and the impact of cold homes on the whole population, not just pensioners. There is huge anxiety at the moment about lone parents and the extent to which they continue to struggle the most. It is important that we look in the round at this picture and not just focus on the pensioner population and the impact of the cut to the winter fuel payment. If there were an impact assessment, I would urge that one of the things to look at would be the application of the NICE guidance on cold homes. NICE put together some very welcome guidance in the middle of the last decade, tackling the impact of cold homes, and excess winter deaths. It would be good to see to what extent of the practical application of that would have been to offset some of the impact that this situation has caused. That would be very valuable. That framework could be hugely valuable, but it needs to be reviewed and updated if it is to play its full part.

I won’t add to what Simon and Peter have said on that. What is important is that we do not get into this position again and that when changes are proposed that are going to impact pricing and the fuel port, there are impact assessments that look specifically at the impact on those who are struggling financially to afford their energy.

You have already touched on the campaign to take up pension credit. I would welcome some reflections on how effective that has been. Also, has there been much success in helping people who are just above the threshold? Do we have the information to analyse this fully, or could some additional work be done to make sure we have a clear understanding of where we are on this journey?

Yes, this comes into the impact assessment and looking at how we can react more to what happens. We know from previous winters that when the average temperature goes below 4˚C, we tend to see a rise in the number of people dying as a result of that winter. We need a much better grasp of the health data coming out of the NHS so that we can make those assessments. We could also see some reform of the cold weather payments. They are more of an extreme weather payment and are paid out in advance of the temperatures dropping. There is a point to giving a pensioner money after the event, but they will not base their decision to turn their heating up on money they don’t have yet. Making that more proactive, looking at when that money is paid out based on predictions, would help. We need to see much more rapid reporting of data so we can assess what is happening each winter with the health and wellbeing of our pensioners.

It was good that the campaign to take up pension credit mobilised the above-the-line campaign with the radio advertisements and the work to advertise it in GP surgeries. That was all good and it was reaching the right people, but it was just too late. We know that we were herding people towards a narrowing corridor to be processed. People who started the process but were processed in time were frustrated but the vast majority were eventually sorted out. However, it caused concern for the agents, referring people in, telling people it was worth it, if they did not think they were going to be processed in time. There was some reputational impact. The role of community groups is vital, particularly where you need multilingual assets to get through to diverse communities and individuals, and other types of engagement techniques, which we know are effective, rather than just broadcast from the Government.

There was a point at the start of the campaign when we were directing people to the portal, but the application time was so long that they would not have the winter fuel payment in time for the cut-off. If we are going to do this campaign and ask community groups and charities to make a really concerted effort, at the very least there must be resources in place to then deal with that effort.

Let’s hope it is not a one-hit wonder. It will be just as vital this winter.

Every year more pensioners come in, so we need to make sure that this happens every year.

Bearing in mind the winter fuel allowance is only a relatively small sum of money compared to other opportunities in the benefits system, how big a part does it have to play in tackling fuel poverty? Reflections around that would be really helpful.

It is a chunk of the £700 increase since 1 April. If you are getting the upper limit, £300, that is almost half. It is significant, but it is obviously not going to offset the full impact of recent rises, let alone tackle the overriding affordability that some households may face. Its main limiting factor is that it is income support rather than directly off bills. I think if it were directly off bills, the impact in terms of warming people’s homes and the outcome that you want to see of the policy keeping people out of hospital and so on, would be much more guaranteed.

I agree that it needs to come directly off bills for it to be beneficial. It has not been well targeted. It is more targeted now, but it is not enough to make that key difference to help people.

That is helpful. I don’t know if you are aware that Independent Age has asked for a review of levels and how it is applied. Do you have any reflections on the thoughts in that area?

It is the tapering issue that really has to be addressed. Within the coalition, there are views on what level the pension credit threshold should be increased to. Certainly, we need to see that threshold increase. The taper point, introducing that cut-off was hugely damaging.

If there is going to be a tapered system, we should resist the temptation to spread the jam—that is a horrible way of putting it—spread whatever budget there is as thinly as that taper applies to because the people who are weighted down at the lower-income deciles desperately need more support. It is right that you approach that in a way that is already recognised through the age differential in the policy. It would be good to see that same approach being weighted depending on income as well.

In light of those comments, do you disagree with universality?

Not as a principle, but in times of need. In these situations, if you are going to provide support, it is vital that it gets to the people who need it the most. I would argue that we have not actually done that in this context, but universalism is a particularly good principle.

In some ways, we risk being slightly offensive to pensioners. We are arguing about the money and the support that we should be able to give them when we know that the energy industry as a whole has made billions and billions of pounds of profit. I appreciate that for suppliers the situation is slightly different, but for the wider energy industry, if you consider the network firms, the transmission companies, if you look at the market trading firms that engage in trading our energy, there is billions and billions of pounds of profit. I think there have been some suggestions that there needs to be a wider industry contribution to the support that we can give to pensioners and others.

Can you point to any discussion documents or anything where that has been unpicked a little further, which we could reflect on?

Yes, I can send you something.

Peter, you were talking about the cold weather payments. It sounds like that would not be your preferred way of addressing this problem, but could you just unpack a bit what you think of the scheme bearing in mind that we do not need to use the current arrangement, which is pretty clunky and, as you say, has not risen much? Resolution Foundation did some work suggesting a more sophisticated, pre-emptive, day-by-day way of anticipating cold weather, giving a more universal grant to people. Leaving aside the question about energy costs, which I recognise is more important in a sense, if we are trying to target support, would that not be better?

Cold weather payments have the virtue of scaling with need, and they are triggered more frequently in the north, where there is more need for them, so that is good. But, yes, I think you have hit the nail on the head in terms of moving away from it being paid in arrears. Sadly, we saw situations in November last year, when it got to the sixth day of freezing cold weather—literally sub-zero, almost minus 18˚—and then we had this huge swing to plus five, plus six, and people lost that; they did not get that payment. If we are telling people, “Don’t worry. You might get £25 this week. Just hold on. You might get it,” it is not going to give anybody any confidence, is it? Given AI, given the sophistication of the Met Office these days, it is not beyond the wit of man to pay it in advance. In lieu of that, you could look at the temperature thresholds. Simon alluded to the fact that freezing cold weather is not what kills people. More often than not, it is the milder weather. You could look at those temperature thresholds, reduce the number of days, and reduce the number of weather stations. There are a number of things that you could do to that scheme to make it more effective, and pay out a little bit more than you would if you do not make those reforms.

What is the point about milder weather being worse than cold weather?

Physiologically, conditions below 5˚ start killing people in their homes, and in fact when there is a freezing cold spell is not when you see the excess mortality. It is a couple of weeks after that that you see what is called a death spike. That is not a nice way of putting it, but that is when you see excess deaths increase at a population level.

So very cold is not especially more dangerous than just cold?

That is pretty true, but it is whether it is sustained or not.

I see.

Just above freezing tends to be damper, so that is when you get the cold damp homes problem, which is what causes the mould and the breathing difficulties and all the rest of it. So it is that sort of contribution.

Very few people die of exposure.

No. Freezing is unpleasant—but no, I get that. Thank you.

Thank you all for sharing your insight. Eligibility for both winter fuel and cold weather payments, as we have discussed, is linked to the receipt of means-tested benefits. What do you think are the main pros of that, but also the limitations of using benefits as a proxy for the fuel payment?

Low income is clearly a key factor in fuel poverty, so in a sense a means-tested benefit is a good starting point. Where we struggle is in the precise targeting of cold homes. Obviously, those living in poorly insulated homes need more support than those living in well-insulated homes. It is particularly a challenge for older people in low-cost private rented sector, where landlords have perhaps more limited incentives to insulate. It takes levers to oblige landlords to invest in upgrading their homes, something that has fallen behind in the sector relative to other housing stock. That really is a key issue here because, if you are in the private rented sector, you have limited ability to affect how much energy you are going to use, because it is not your responsibility to insulate.

They only get about half the people that we are really concerned about, maybe just over half. I believe that 40% of fuel-poor households in England are not on means-tested benefits—they are working age typically, and are not claiming any benefits. So instantly, we know, that is a vulnerable cohort of people that we are not supporting. Anthony is absolutely right that energy costs vary hugely within income deciles. One household might be living in a hugely energy-efficient property in top-rated social housing. Somebody in the private rented sector might be paying £3,000 to £4,000 a year on their energy bills. Given that swing, just relying on means-tested benefits without thinking about the energy spend in the house is problematic.

When we looked at who should benefit from energy bill support, the public backs the principle of giving support to older people, but also people who are medically dependent on staying warm, people with respiratory diseases, cardiovascular diseases and other vulnerabilities and so on. There is a broader group there that is not captured by means-tested benefits.

This is fascinating, thank you. I suppose I take away three things from what you are saying, and I want to test them with you. The first is that targeting is a good idea, so you are not against the idea of targeting, per se, but it is what you use to target. It actually sounds like, Anthony, for instance—not wishing to put words in your mouth at all—it is something to do with the type of housing stock you are in, and the housing tenure is in some ways more important. It raises a question about whether it should be targeted, for instance, through something that is connected to housing, and we do have housing benefit. I have another question. Peter, you raised an interesting point about the fact that 40% of people in fuel poverty do not receive means-tested benefits. Obviously, many of them are outside the scope of this inquiry, because it is about pensioners, but what is the relative thing with pensioners versus non-pensioners? Are pensioners the main fuel-poor group?

Probably single parents with children are the single worst-off group, in number and levels of fuel poverty, but that is not to take away from the fact that a lot of pensioners are struggling.

About 20% of the fuel-poor population are pensioners; something like that.

One in five of the fuel-poor are pensioners.

Yes.

The reason this is important is that we have heard concerns about people who are just above the level of the cliff edge for passported benefits and therefore miss out. Anthony and Peter, this is almost your point that the Venn diagrams do not really overlap. Is there a better way of targeting where the state has information to target? I suppose that is the $64,000 question, isn’t it?

Absolutely. In a sense, the public sector holds the key here. Energy suppliers know a lot of information about their customers, Where they have smart meters, they can see when somebody is off supply, or they can check in on somebody because they are not using energy. If data were shared between HMRC, DWP, local council tax information, and the NHS, and a responsible body brought it all together, it could give you key information on who is struggling, and which households are struggling. In a way, we have the data, but it is not being used. I have heard about data privacy over many years, but sometimes health and wellbeing may need to take priority. I have heard concerns about data matching. I say that where there is a will, there is a way. Where there is AI, there is a way.

Thank you. Peter?

Undoubtedly, using HMRC data and health data, where it exists, and where it can be done in a data privacy-sensitive way, is a particularly good thing. I will restate the point I made earlier. As long as that is being used to directly enrol people in the support that is on offer, that would be a much more effective route than requiring people to opt in to support where we know that there are huge barriers.

I would add making sure that energy supply is a part of that. You mentioned the benefits of smart meters, which absolutely could be used to detect whether someone is not using enough energy. For those who are still on old-school meters, and for those on pre-payment meters, if they are in smart mode, again, the suppliers do good work in supporting those households. However, there are a lot of people on pre-payment meters that are not smart and so we don’t know whether they are topping them up. That should also be a risk factor.

This is fascinating. It sounds like the companies have an important role to play, not least as providers of data that will give us that integrated picture but, clearly, that is a longer-term project. Anthony, you are absolutely right, but the challenge of data integration in government is a difficult one, and GDPR makes it all the more so. Are there any other short-term things, low-hanging fruit, that DWP or the Government more broadly can be doing today—acknowledging all the constraints you have outlined—to try to help people now?

In the short term, some very welcome work is being done, looking at issues about extending the warm home discount scheme to groups that previously had to apply. That is very welcome and necessary to offset some of the impacts for lone working-age households and lone parents, who should be some of the prime beneficiaries of those steps. That is vital work, not only in the context of providing additional support this winter but in an ongoing way, when we hopefully clarify the ongoing support that will be available to directly offset energy bills. Finally, there is a set of schedules in the Digital Economy Act and a number of organisations are given access to that information. One of those is energy suppliers, but we would like to see local authorities directly having that information, so they could better target things like the household support fund. Energy networks could also be provided with that information because they often encounter households in vulnerable circumstances right at a crisis point: a broken-down boiler, a gas leak, and a point of disrepair of some appliance because of neglect. It would be fantastic if they were able to refer these people to support and know that they will get it because they are eligible.

Yes, a clear pathway where somebody in the public sector identifies somebody who is probably in need. For example, GPs will see people in need, and they can identify them. If there were a clear pathway to allow them to bring people into the system it would help. It will not be the whole answer, but it will help.

We have had social tariffs in the past. Then we moved to the consistent policy in the warm home discount scheme. When we had those social tariffs, it was a big concern. The level of support available from different suppliers varied greatly. It was not very generous from some suppliers, and it did not track need at all. We would not want to move back there. We would want to evolve what we have in the warm home discount scheme to be fit for purpose. The big opportunities for a social tariff are to not only bag some of the benefits that we have now with a discount, like the warm home discount scheme, which provides all the support up front but also provides an ongoing reduction in running costs particularly for households on pre-payment meters, for example. That would be very welcome. However, the point about the depth of support also needs to be grappled with. I mentioned earlier that the £150 rebate has only gone up from £140 in 10 years when energy prices have increased by £700 in the last couple of years. This is the depth of support issue that we need to grapple with. It is very difficult at the moment to make that argument to Treasury, but potentially a hybrid between maybe consumers contributing some money towards this social tariff, as well as Treasury providing some support could be brought together in a way that means we can provide meaningful levels of support for the poorest households. As Anthony said, give them that bridge of having their house renovated and reducing their exposure to these energy costs in the longer term through energy efficiency measures.

A social tariff is potentially important. You can do it by giving a lump sum or you can do it by having cheaper energy, cheaper unit rates, or cheaper standing charges, whatever. The advantage of the latter might be that at the time when you need energy, you are paying less for it. Those who are poorer are more likely to be on pre-payment meters or paying on receipt of a bill. They will get the reduction exactly when they need it. There are advantages either way. The key thing is they get it at the time they need it, and they get a meaningful reduction.

If you do not use much energy, the standing charge is enormous. If you use lots of energy—for example, if you have a health vulnerability—the standing charge is quite good value compared to the unit rate. You need tariffs with and without a standing charge. The cheapest one for that customer is something, frankly, the supplier should be able to work out and put you on to. Standing charges are bad for some people but for a minority of people they can be beneficial, and you should cater for both if you can.

We have talked in the past about an obligation on suppliers to move customers to the cheapest tariff that they have available, and that that should be something Ofgem could require of suppliers to do. The unit rate approach is absolutely vital because, as we have said, if you have high energy needs because of a health condition having that is important. On standing charges, there is so much on standing charges that we could look at. Is the standing charge the best place for that? If we are talking about investment in the networks and transmission, is paying for that through the standing charge the best thing to do or is the better approach through investment or through general taxation, which would bring down the standing charge and bring down the cost of people’s energy bills?

At the moment, as I am sure you are aware, Ofgem is consulting or has just finished consulting on whether it is going to allow customers to opt into a zero-rated standing charge. This was its great proposal after a year of thinking about this issue. Sadly, one thing it does not do is address the plight of households on pre-payment meters that accrue these standing charges irrespective of whether they are using any energy in the home. As an advice provider, sadly, we see households that have racked up £300, £400, £500 on the standing charge on gas in particular, because they have not heated their home for months, if not years. That is an impossible situation for people, resulting in no hot water and no space heating. It is very difficult. We think that they should change the way that debt accrues on the meter to put it at the back of the meter, which means that it could be negotiated and repaid, without needing to be repaid in full. That is the case at the moment. It is staggering that we are applying that Victorian approach in the 21st century, to be frank.

I think they already do subsidise other bill payers. There is about £18—I think is the current price—per customer, per year for the bad debt allowance; it could be more than that now. There is already a degree of cross-subsidisation that goes on; it is what that money is used for. At the moment there is little transparency about those debt allowances and what they get spent on. If they were targeted in this way to write off gas arrears for those customers and help them get back on supply, that would be a very good thing and obviously have a wider social benefit, which would more than offset the upfront cost that someone has to pay, and I accept that someone would be paying.

A tariff paid for by energy companies is a tariff paid for by consumers. Let’s say you put £20 on my bill to subsidise somebody who is fuel poor; that fuel poor person will also pay £20 from their bill to subsidise themselves. If it were paid for through taxation, I would be paying probably more than £20 and they would probably be paying nothing. Which is fairer? I would suggest the latter. Whether it is practical at the moment in the current environment, I do not know.

If the energy companies do it themselves then, generally speaking, the energy consumers pay, the company passes on those costs through a price cap. It is a question of how consumers pay and what is the fairest way of doing it. I would suggest the fairness here might outweigh the bureaucracy.

You can have hybrids, though. In the course of the energy crisis obviously a lot of tax-funded support was provided to the energy companies that administered the schemes on behalf of the Government. You can have this crossover, and that is something you might get to with a social tariff, for example.

The warm home discount, for example, which is paid for by the bill payers, sometimes when Ministers say “our” warm home discount scheme, we are slightly annoyed. It is actually our warm home discount scheme that we are all paying for and we are all helping people with. That approach does exist. Just to add the point, and I will write to the Committee on this, look at the hybrid models where the wider energy industry—network firms, transmission firms, market traders—also pay into that and contribute given the amount of profit that they are making.

I think one of the challenges obviously on electric heating, especially at the moment, is around the RTS switch off and the radioteleswitch switch off. All efforts around that should be focused on making sure that we are not in a situation on 1 July whereby consumers are left without hot water or heating because the RTS rollout has not worked. For people who are on electricity only, they do face often higher costs. There is, again, in terms of when we are looking at housing type, your heating type as well should come into that because there are additional vulnerabilities for those who are on electric heating and the effectiveness of those heaters.

If you want to increase the amount of electric heating, I think what Energy UK is proposing can be a good measure. I would not necessarily conflate moving to electric heating and getting towards net zero with addressing fuel poverty. They are sometimes quite different things.

I think that supporting households with the ongoing running costs of a heat pump will be necessary, potentially by less if we do it effectively and we install those heat pumps effectively, and we have high quality standards supporting those households that are electric only. Electric heating will also be important in that debate. I will let Ned talk about the virtue of his policy in a minute, but I would be nervous about assuming that a current policy like the warm home discount scheme, even if it was doubled, would be sufficient to offset the distribution of the impact that such a radical change might have. We will need to look carefully at the distributional impacts across all types of consumers, but particularly the most vulnerable.

A very quick follow-up,and thank you all for attending today. I am interested in what you were saying there, Simon, about the RTS switch off. I am concerned about that. I am in a constituency with a substantial number of constituents who are affected by that. I was wondering if you could give us your view in terms of how that process is going. I have heard from a lot of constituents who have had difficulties in securing appointments to have their meters switched over.

The process is doomed to failure. We are not going to see RTS switch off happen on 1 July. There are still going to be hundreds of thousands of RTS meters in people’s homes on the date that they are saying that they are going to start winding down the signal. We do not know what is going to happen. Peter might come in on this as well, but the risks that have been outlined are either your hot water and your heating are always on and you are going to be running up a massive bill, or it is always off. Even in the summer that is going to be disastrous for people, especially pensioners, in not having access to hot water. Or it is going to fix into a mode where it is going to start charging you at the higher rate. Again, that is going to be a real problem. I do not think we have heard anything from industry about which of those is most likely. Indeed, it might be a combination of several factors in different areas. It is really concerning, and we need the industry and Ofgem to present a crisis plan as to what is going to happen on 1 July to offset this challenge.

I would just add to that that I think at the moment, in many ways rightly, energy suppliers are a big focus of that because they are supposed to be replacing these meters, which can offset the impact. I think if you get to plan B and that crisis plan that Simon mentions, you are going to need to bring different agents into that loop. I think particularly the role that district network operators might have in that context could be vital. They have the experience of knowing who affected customers are because they have the priority services register. They would be able to tell you who the most affected customers would be. They often have relationships with organisations—like the Red Cross and others—that can get meaningful levels of support out to people on the ground to offset crisis events like outages. They would be very well-placed to be able to dial up that activity. Sadly, we have tried to prompt that conversation in both the Department and in Ofgem and it has not got far. I am hoping that your interest and others could dial that up a little bit because it is needed.

I was going to ask a question about to what extent energy companies have the data that they need to target pensioners. Based on the comments you have already put, it is not just energy companies, local authorities and energy networks were mentioned as well. Are there any others? Then where should they be getting data? We talked about HMRC, DWP, smart meters, and the potential of AI. Any more that we should add to either of those lists?

From my perspective, you have covered the main bases here. Suppliers do have the potential to get a lot of useful information to help the help their customers through smart meters. Obviously, the smart meter rollout is not complete by quite a long way but that can really help. It has to be tied in with data, which only the public sector can provide, and there needs to be effective gateways. Data security is always seen as an issue. There has to be found a way of allowing private sector actors sufficient access to sufficient data to help people, and that will be the key, I think.

As much as I have spoken about the virtue of automation and auto-enrolling people, I think you do need to provide some discretion locally for community-based organisations to be able to refer people into assistance and for that to be accepted within the administrative regime so that agency will know that that person that is referred gets that support because otherwise they are going to lose confidence in referring people in. That is often what happens with some of the more unpredictable elements of energy support. That local discretion for people to refer people in and not herd them towards a closed door is vital as well.

I think making sure that that is extended to GPs, health practitioners, social workers. The risk if you do that is that that all ends up at the door of the household support fund. I know you have looked a lot at this, but one of the things about that is the household support fund needs to be made permanent and annual, and it needs to be inflation linked so it continues to rise, in value in order for local authorities to support people properly. It must be recognised that that fund has had to support a lot more people this winter, because it was in existence before the winter fuel payment cuts came in and then more pensioners were having to rely on that. There is a report recently published by the Children’s Society and others around the future of the local welfare inquiry. Another thing that they suggest is that in order to make sure that there is a consistency across local areas, that there is some form of DWP-led audit and oversight of the Household Support Fund. Therefore, we can make sure that it is being used to target those people who are most in need, and there is a consistency so that wherever you live in the country you are going to be able to get a similar level of support.

You have answered my next question.

Sorry.

It is what we need to guard against. You said, data security still need local discretion and the risks of everything landing on the household support fund. Anything else you would add to that? To what extent would sharing information from priority services registers help?

Priority services registers are particularly good. They are very helpful. There is already sharing between water and energy on an increasing basis. Generally speaking, they are more on other non-financial vulnerabilities, so they can be helpful, but they are often not telling you so much about financial vulnerability. Making sure that you get information on financial vulnerability is a key part of this.

Sorry, what scheme is this referring to? Is this just in general in terms of targeting future support? Okay.

Clearly, the priority services register has a vital role to play. We have heard before about the fact that this needs to be shared across different utilities. As we have heard, we need to make sure that it is not just a pure yes/no definition of vulnerability. There are often grey areas and ensuring that we can capture that. The other thing to think about in this context is that people’s situations do change. Not everyone is always going to be in fuel poverty, not everyone is always going to be low income, not everyone is always going to have the same health condition. We need to be able to make sure that it is able to reflect changing circumstances and obviously, yes, people move into those situations as well as move out.

The virtue of the PSR data is that link with the health conditions. You will need to provide, in some instances, critical support to people so they can manage those health conditions, and a power outage or an inability to afford supply will result in significant detriment, ill health, and possibly death. Not using that information seems absolutely crazy, and in some ways you would be culpable. The way in which that needs to be done, though, exists institutionally. We have the priority services register that can be shared. What support you are providing those people? What is it that you are going to give them? Are you going to give them a sizeable chunk off their energy bill? Are you going to give them energy efficiency measures? Those things at the moment are not sufficient in scale or in terms of the customer journey to guarantee that that person will get something. There is always going to be a trade-off with the Information Commissioner’s Office about proportionality, whether or not you can guarantee to be able to provide a benefit for the use of that sensitive data. The final one that I would add to the list, coming back to your original question, is repeat hospital admission. We know that repeat hospital admission exists often because of poor housing standards. Either you want to get the landlord on the hook for sorting that out or you want to be driving support that is available for owner-occupiers to the door of those individuals and hopefully doing it on their behalf. Often this carousel of ill health is very solvable, but it requires a focus and that starts with the data in order to determine who those people are.

There are also multiple ways that the Government are working on this space. If you look at fuel poverty in the round, you have also the child poverty taskforce, you have health and energy missions, you have the MHCLG opportunity mission, working together across missions, having concerted winter plans involving the NHS and other key actors in there. It is key people working together. It is not just the priority services register, but it is the public sector as well working together.

Thank you so much. I have one small question, if I may. You were talking before about the proportion of fuel poor population; the largest group were lone parents. I wondered what the proportion was for disabled people.

I do not know. We can write you on that.

Please, thank you very much. That concludes our questions to you. Thank you Simon, Peter, and Anthony. This has been a very good session, and we kept to time. Even better, so thank you very much and come again.   Examination of witness Witness: Ned Hammond.

Welcome back to the pensioner poverty inquiry. We are delighted to welcome Ned Hammond from Energy UK. Ned, would you like to introduce yourself?

Sure, thank you for having me. I am Ned Hammond. I am the deputy director on the customer policy team at Energy UK. Energy UK as a whole is the trade association that covers the entire energy system. We work with suppliers right the way through to generation. My role focuses on everything that is customer facing, so that includes energy supply as well as support schemes and also heat decarbonisation as well.

I understand that Energy UK have said that 40% of customers are struggling to afford their energy bills currently. Do you have the figures that relate specifically to pensioners on that?

We do not have figures ourselves specifically on pensioners, but there is data from other organisations that shows that. If you look at government statistics on fuel poverty, those over the age of 60 are broadly in line with overall households to be in fuel poverty, around 11%, and have a similar average fuel poverty up as well, around £400, on those government statistics. If we look at some recent data from Ofgem surveys, that suggested that 36% of pensioner-age households are struggling with their energy bills, and around 1% are behind on the bills. That is a considerable proportion, although it is lower than the age groups that are struggling the most; younger age groups, between 16 and 35, where you have around two thirds struggling and over 10% that are behind on their bills. That is obviously self-reported data though, so there may be an impact of the way that different age groups respond to surveys as well.

What are the implications with such a substantial proportion of consumers struggling around their heating costs?

We are seeing significant implications of that over the last few years. It has come from the energy crisis and then continued beyond that. We have seen energy debt increasing considerably over the last few years. That has risen from less than £2 billion before the energy crisis to now nearly £4 billion. Those that are in energy debt and have a payment plan are typically, on average, about £900 in debt. Those that are in arrears and do not have payment plan yet have over £2,000 of debt on average. There are 2.3 million households in total that are in debt arrears. It is really significant. As mentioned previously, the impact of that is that cost has to be socialised across everyone’s energy bills. Ultimately, it means that all of our energy bills are higher, as well as those of people that are in debt and struggling. There is obviously a high correlation between people that are in debt and the people that are in fuel poverty.

The Government are aiming to reduce bills by £300 by 2030—obviously £300 a year—but you are saying that this is largely dependent on international gas prices. How will that be offset, for example, by energy efficiency measures that the Government are bringing in?

The Government have made a commitment to reduce energy bills by £300 a year by 2030. They also have the Clean Power 2030 mission to get to a largely decarbonised electricity system by the end of the decade. It is important to say that we believe that clean power will ultimately lead to lower bills, but that is likely to drive down bills in the 2030s rather than over the next few years. We need to see policies that will be more proactively reducing bills in the immediate term. As things stand, there have not been any policies that have been formally announced that are going to actively do that. We know that the warm home plan, which is looking to improve energy efficiency and invest in low-carbon technologies, is forthcoming, and we will see what that looks like. That potentially could have a significant impact over the next few years. We also released a report in March that had 10 different measures, including that one, to cut bills for households and businesses. We think implementing those policies could go a long way to achieving that £300 target. If you were not to do any of those things, the gas price would continue to set the wholesale price for most of the time and, therefore, we would continue to be highly dependent on what happens with gas prices. You might have a situation where the wholesale gas market tumbles and you get lucky and the bills come down, but I do not think that we should rely on that.

The Committee on Fuel Poverty—you probably heard the earlier session—said the targeted report will remain important and necessary for the foreseeable future. What would change this assessment?

There are a few ways of looking at that, but largely what you need to do is remove the debt stock that is in the market and then also get to a point where bills are more affordable for people. Implementing our suggestions to cut energy bills could help to do that. You need to get to a point where bills can be affordable for everyone and then also need to reduce the debt from around £4 billion at the moment. There are a few measures in place or being looked at that will help to do that. Ofgem is looking at a debt relief scheme that it is aiming to implement later this year. That potentially could have an impact, although we have some concerns about some of the options that have been looked at in terms of the structure of that. We would like to see that scheme focus in the immediate term on writing off some of the debt that is in the market at the moment, and then look at some longer-term options around debt matching and having households that are struggling with their bills on repayment plans and then that being supported by the suppliers matching those repayments. We think that second part is a bit more complicated to design and therefore should come later. We also need to deal with the stock of debt that is in the market as well as the flow of that increasing. Dealing with that stock could be helped by doing automated debt write-off as well. That would be helpful. We are not going to get to a point where we cannot have any targeted support at all in the near term. Those targeted support schemes would need to have their impact to then start to look at a point where you could potentially remove that. As was mentioned earlier, the existing targeted support schemes are not enough. They do not cover the fuel poverty gap. Until they start to do that more significantly, you are going to end up in a situation where fuel poverty remains and energy debt continues to increase.

What would you say in terms of—again, as we heard in the previous panel—both DWP but also energy companies providing that support through a social tariff? What are your views there?

A social tariff means quite different things to different people, so it depends on how you look at it. At Energy UK, we think that what is important to deliver is a new long-term targeted support scheme that replaces the existing warm home discount. We think there are basically five key principles to that. The first of those is better targeting. It was mentioned a bit previously, but we would like to see a move towards a combination of income, health, and energy use data to be the primary ways at which you would use that scheme with things like means-tested benefits as secondary supports to that. We also think there should be tiered support, so again as mentioned previously, but at the moment most of the support schemes are a flat rate. You either get it or you do not. By using things like income and health data you will be more easily able to target those that need higher levels of support and some that need some support but not as much. Also, it would be helpful if the support were variable. At the moment energy bills are considerably higher than they were pre-crisis and therefore, as was mentioned previously, the warm home discount is only a marginally higher level than it used to be but is nowhere near enough. But if we were in a situation where energy bills were much lower, clearly the amount of support would not be as significant. You could also do that in a way where more people would come into the scheme as energy bills rose because they would then become eligible. This would also help to avoid the situation we saw in the energy crisis where a significant amount of universal support was provided and was very, very costly. At the moment, where energy bills are right now, we need a larger scale. The warm home discount is around £500 million a year. With the expansion that is planned it is going to go up to around £800 million a year. But across the country as a whole, on government statistics, the fuel poverty gap is £1.5 billion. On other people’s numbers, it is even higher. It needs to be big enough to deal with that. Then the final principle that we think is important is that it is progressive. At the moment, the warm home discount is on customers’ energy bills. It is also part of the standing charge, which was mentioned previously. It is particularly challenging. If you were to move that into government spending, we think that would be a more progressive way with dealing with that. Those are the principles that we think are important. One other thing I would mention around this is that there is a scheme that was run in the Netherlands called the Temporary Emergency Energy Fund, which has a lot of these principles. That is an interesting potential model to have a look at. I would be happy to follow up with more details of that if that would be helpful.

Thank you. Temporary, though, is it?

It was a temporary scheme during the crisis, but we think the principles of it could be used for a permanent scheme. An actual social tariff in the market we would have more concerns about. It depends on the exact model you looked at, but we think any of those models could potentially distort the market and might also discourage customers from engaging with their suppliers and potentially getting benefits of the actual tariffs that are available to them.

Understood. So, it is more the language.

Yes.

You will have heard in the previous panel we were talking about winter fuel payment reduction and access. What assessment has the energy industry made of this and, for example, do you know how many pensioners in fuel poverty are now missing out?

We have not done any more assessments than the people who were on previously, so I would revert to their numbers for that. Obviously, the Government did an impact assessment on what they thought would be the outcomes from the change. What we have seen is that there has clearly been a significant reduction in the number of people who are able to access it and a small proportion of those are people who would be eligible for pension credit but are not accessing it. At the time of the announcement, it was around 880,000 pensioners who were eligible for pension credit were not accessing it and therefore were not able to get the winter fuel payment. Those people are more likely to be the people who potentially will be in fuel poverty. Clearly we have seen a bit of progress on that over the last six to nine months but, as was mentioned earlier, there is going to need to be continued efforts put into that to get as many people who are eligible for pension credit to sign up for it as possible, given that so many of these schemes are now dependent on taking up that benefit obviously means a fuel payment but also a warm home discount and the cold weather payments as well.

What steps so far have industry providers taken to identify and target support of people?

At Energy UK we run something called the “vulnerability commitment”. This is a commitment that 13 energy suppliers that account for about 95% of households are signed up to and that is run in conjunction with consumer groups and charities, and also DESNZ and Ofgem are involved in it. That looks at various themes each year. Last year one of the key themes was identifying and supporting vulnerable households, improving efforts to do that. Some of the key things that were looked at were combining internal data that suppliers have on their customers with behaviour signals. Things like regularly going off supply or missing payments and also increasing training for staff to better recognise customers. In some cases, suppliers do have a reasonable amount of data on customers, and smart meters are helping to improve that, but it is dependent on customers engaging with suppliers. We would like to see legislative change come through that would enable new data points to be available in the right ways, but also some of the use cases potentially to expand to enable suppliers to be able to use potential vulnerability indicators to do things like populate their priority services register and things like that. We are part of a data-sharing working group that is led by DESNZ, chaired by Minister Fahnbulleh; DWP are part of it at the moment, and we are also trying to work with other Departments such as HMRC and the Department of Health to try to access more data in the future where that is more of a longer-term aim. In the near term, the focus is on clarifying what suppliers are able to use data for in order to provide support to low-income and vulnerable customers.

You slightly anticipated my next question. In terms of being able to access DWP data, has that been easy, can it be improved?

The Digital Economy Act does provide for some of that. I am not a legal expert—you will get to the extent of my expertise fairly soon. Through the warm home discount, particularly now that there is the expanded warm home discount coming in, that means that the main means-tested benefits will mean people are able to get warm home discount. That data matching can then go through to suppliers, and they are able to use that in certain ways, depending on what type of warm home discount eligibility it is. If it is the DWP means-tested benefits data, they would be able to use that for a separate element of warm home discount called industry initiatives, which basically allows suppliers, often through third parties, to provide additional benefits like debt relief or energy efficiency measures or financial assistance. What it cannot be used for at the moment is to combine it with suppliers’ own data to help populate their priority services register. We think things like that could potentially be helpful in the future. Interestingly, the pensions data that is made available is based on different legislation and, therefore, slightly wider uses are available. I can follow up with more detail on that because it might be helpful to go through it, and in writing it might be a bit easier.

One final point, what steps do you think are needed and by who to address the pension credit slippage, which we have talked about a lot as well, which is a big issue where just a few pounds over the threshold and you miss out not just on winter fuel payment but all the other passported benefits.

There are a few different steps to take here. The first one is of course getting as many people who are eligible to sign up to pension credit as possible. The Government have started work on this and more can be done. Working with consumer groups and charities is important. Then there could be work the Government do to look at the threshold of a pension credit at the moment and whether that should potentially change whether there are additional thresholds to have that would provide—not necessarily provide ongoing support but would make them eligible for a smaller element of things like winter fuel payment. Longer term, I think that the principles that I mentioned around long-term targeted support would help to do that. If you moved from a system that is focusing on using means-tested benefits, which are a helpful proxy for what we have at the moment, but, as you say, you are either in them or out of them. If you move to a system that is focused on using data around income and health, and in the case of energy, energy consumption, then that provides a lot more flexibility to provide the level of support that people need. There are a lot of challenges to be able to do that, that is a long-term project, but if we could get to that point you would have far more households receiving the level of support that they need.

Can I follow up on what you were saying about the legislation that you would need to enable there to be more data sharing? What specifically had you in mind?

Some of it can be achieved—again you will get to the level of my expertise fairly quickly—through secondary legislation changes to the Digital Economy Act. At the moment that specifies certain parts of data that can be used and also the use cases for it as well. Those could be added into the Digital Economy Act in order to make that data in some form shared or matched to suppliers. Our preferred model is to have a third-party organisation that receives and processes the data and then basically puts it into an indicator for suppliers. Then you can work around data security and privacy concerns. There may be more significant legislation, primary legislation that might be required for bigger changes to the way that data is shared and matched with the energy industry. It may be that some types of data, like income, may need that primary legislation rather than just changes to the existing legislation.

Absolutely. We want to see the support that low-income vulnerable customers need, and it is right that there is protection in the market for vulnerable customers that are not necessarily able to engage with their suppliers particularly well. This is one of the reasons why the data sharing and matching needs to improve so that suppliers are able to get the data they need on vulnerable customers when they do not engage, but also the energy market and the retail market is evolving quite a lot at the moment. As more people are getting low carbon technologies, there is more opportunity for them to shift their energy demand to various times of day. For example, if you have an electric vehicle, if you have a smart tariff with one of the suppliers, you plug it in at night, you need it ready by a certain time of day, but it does not matter when that electricity goes into the car. It goes in at points when the price is cheapest because demand is very low and supply is high. Vulnerable customers may struggle more than other customers to be able to access some of those opportunities, even if they have some of those products. Let’s say through a supplier or a government energy efficiency scheme they have a heat pump put in or they have solar, and batteries put in, some may have those products, but they may not be able to access them. It is important that we try as hard as possible to help those customers to be able to benefit from those, but where they cannot you need to have the protection in the market to make sure that they are not hurt by that. At the moment we have a price cap in place—a large number of customers are on this—but the idea of it is that it is a default backstop tariff that provides protection to customers who are not able to engage in the market. We think that a combination of that and a proper long-term targeted support scheme is the thing that can provide the level of protection that is needed for those vulnerable customers. We think that if you introduced—and again it depends on the model—a specific tariff in the market, potentially some low-income customers who might automatically go on to that, but are not vulnerable, might miss out on all those benefits of the new flexible market. Also, you would potentially have distorting impacts on the market as a whole. One of the types of social tariff that is being looked at is a rising block tariff where the price of energy gets higher the more energy you use. A lot of vulnerable customers are have high energy needs because of medical requirements or things like that. If you implemented that, you would need to put in a substantial number of exemptions and trying to revert that. We think that would be too complicated and it would be better to use the existing model of energy rebates, and there is potential to evolve how those rebates are provided. There are some suppliers already who provide them in chunks through the winter rather than in one-off to help people manage their payments, rather than a system where you have tariffs in the market that are distorting what we want. We want, overall, to be a competitive and innovative retail market.

There are pros and cons to the standing charge, and there is no easy answer to the best thing to do with it. Ofgem did a large review a couple of years ago that led to a significant increase in the amount of network costs that go on to the standing charge. They now play a bigger role than they did previously. Then there is a large amount of fixed costs that are then recovered through the standing charge. If you were to move those around, you would have distributional consequences. Ofgem did a review last year looking at trying to move some of the standing charge on to the unit rate and decided against it because it was worried that some low income and vulnerable customers would see significant increases in their bills. It is not an easy one to do. The easiest thing to do—albeit it would take some public spending—would be to take the warm home discount and what we would like to become the long-term targeted support scheme and move that into government spending. Because then you are just taking something out of the standing charge, and it does not go into something else. It would just reduce the standing charge without having to worry about people’s unit rates. Outside of those things, it needs serious analysis to determine what is the best thing to do with things that are currently in the standing charge and whether it is better to have them in the unit rates or not. When Ofgem first proposed the zero standing charge price cap option, there was quite a bit of media coverage that suggested people would suddenly just have £300 off their bills, but that is not what would happen in reality. They would move to the unit rate. Some people would have significantly higher bills. You need to think about those consequences.

The Government announced or consulted on—and we hope they go ahead with it—the expansion of the warm home discount, which means that the people in the second group will receive warm home discount whether they meet the high-cost heat threshold or not. We are supportive of that expansion, but we think that one of the things that could have been done would have been to tier those payments so that the people who do have high cost heat got a higher amount of energy rebate than the people who are now coming into the scheme, but they could have potentially had a smaller payment given that they do not meet that other threshold. Otherwise, things that can be done ahead of winter is the data-sharing working group that I mentioned—the DESNZ-led one that we are involved in—making sure that suppliers are making the most of the data that they do have available to them to identify and provide support to vulnerable customers. We think it is important that the Ofgem debt relief scheme, which is being proposed, comes in as soon as possible in a way that can provide automated support to customers that are in energy debt and need the support the most. As I said, we would like to see that provide debt write-off in the near term and then move to debt matching in the long term once that can be designed properly.

I think you have answered most of my questions already, but it is interesting what you were saying about the data-sharing working group. To what extent will sharing that data enable different utilities companies to target support?

It depends on where it evolves to in the future, but if we think about the immediate term, what it is enabling is a clarification of how suppliers can target their customers. It is making suppliers more comfortable that they can use some of that data to identify the customers that will need that support. That can then be the various different measures that I mentioned. It might be debt things, it might be financial assistance, it might be energy advice through National Energy Action, it might be energy efficiency measures. Sorry I lost my track of thought, could you just repeat the question?

It was about to what extent sharing that information will enable suppliers to target support.

Longer term is potentially the bigger opportunity here. This will potentially take a lot of work, but if you can move to a system where more types of data are shared in different ways, then that can lead to better targeting of support. In terms of the long-term targeted support scheme, that would be moving from a system where we are currently using means-tested benefits as a proxy for customers who need support the most, which is good but not perfect, to a system where we are using income and health and energy consumption data for that. Again, that would give an indicator to those suppliers of people that are receiving that support scheme, and that would then be a particularly good indicator to those suppliers that those are the customers that would need additional support potentially as well. If we had the tiered thresholds in place, you could see which ones need them most. Then, if you expanded the ways in which suppliers can use that, it could provide more opportunities. At the moment, which is done through certain existing schemes that suppliers can find those customers. If you widen that to suppliers just identifying customers in general and also populating their priority services register, that would mean that they would have more customers that they are ready to provide support to when they need it, but could also widen the net of customers who may need support that can get the things like the energy efficiency measures.

Are there any unintended consequences that we might need to be aware of in terms of that data sharing?

Obviously anything that involves more data sharing leads to data security and data privacy concerns. There are various different models through which you could potentially do that, but we think that a model where there is a third-party organisation that processes the data and puts it into the format that is needed and then basically sends an indicator to a supplier that would say they are eligible for this type of support, would then provide the suppliers what they need to support those customers. The suppliers would not have the information on the actual income or the actual health issues that the customer has, they would just know that they fit into an overall group of people that need a certain type of support. You would need to put the right regulatory frameworks and things in place for the organisation that was doing that, but there are examples of some work that is being done at the moment. An organisation, a smart data communications company that runs the smart system, has been doing trials of supplier sharing, anonymised smart meter data to them to be able to start doing some of this stuff effectively. They could be a potential company that could do some of this work.

While I have you—and tell me if it is not your area—on the RTS switch over, do you have a view on that process and what else the Government could or should be doing to make sure that people are not left in a position where, as outlined in the previous panel, either people’s heating was always on or always off and running up big bills?

I am the right person, whether that is a good thing or not. There is a lot of work to do here still. There is a lot of progress being made. Suppliers have really ramped up the initiatives to engage customers and get more replacements done over the course of the last year. We are now at over 1,000 replacements a day. Some of the challenging technical barriers to be able to give customers replacement meters have been overcome. You mentioned earlier some customers struggling to get appointments. Suppliers now have a solution for every customer, so it may not have been the case historically. They are also massively increasing their engineering capacity in some of the harder to reach areas. If customers have had that problem previously, suppliers may well be contacting them now, but also please ask your constituents to contact their suppliers again. While the replacement rate has increased a lot, it is clearly not at the point that it would need to get to get down to zero customers by the end of June. We are working incredibly hard as an industry with Ofgem and DESNZ on a carefully managed phase-out plan to ensure that we can replace all the RTS meters over time and minimise any of those impacts on customers. We are focused on vulnerable customers in these circumstances in particular to make sure that we are, as much as possible, trying to engage with them through different methods to help them through that and also be ready to provide them any support, if there are any, on those issues that you mentioned. As I say, we are working hard on that plan at the moment, and we will have it in place in time for the end of June.

Thank you and I will take your contact details afterwards.

Steve Darling has a quick question for you.

We have talked a lot about data sharing. Is there any partnership working with GP practices with things like rollout of vaccinations, like the fuel or covid, and using that as an opportunity to identify vulnerable people who particularly need support?

Within the data sharing work one of the things that we have suggested—and this is the very early stages so I am not saying that it will definitely get to that point—as a longer-term opportunity is to potentially look at social prescribing in some form where GPs would be able to prescribe that people get rebates on their energy bills because of health issues that they have. If we can get into a data world where the sharing and matching is working better, one of the important things is also how quickly we are updating that data, because people’s circumstances can change a lot and they may not be eligible for support one day but the next month they might well be. We think that the GP route with those prescriptions could be a way of doing that quickly.

Thank you, Ned. That concludes the questions that we have for you.