Warm Homes Discount extended and Energy Company Obligation funding confirmed

The government announced on 31 March 2022 that the Warm Homes Discount scheme is being extended until 2025/2026 and expanded to reduce the energy costs of around £3 million low-income and vulnerable households every year¹. The Energy Company Obligation scheme will receive £1 billion in annual funding until 2026 to help upgrade energy efficiency measures in 450,000 homes, cutting an average of £300 off energy bills¹. The announcement came with the publication of consultation responses on the extension of both schemes¹.

The extension sits alongside a wider package of energy bill support worth over £9.1 billion, which the government says will help over 28 million households and protect them from half of the average forecast bill rise¹. This includes a £150 rebate in Council Tax bills for all households in Bands A to D in England, covering 80% of households, with payments being made from 1 April 2022, and a £200 reduction in energy bills for all households from October 2022 through the Energy Bills Support Scheme¹. The government said record increases in global gas prices this year saw the Energy Price Cap, set by the independent regulator Ofgem, rise by 54%¹.

The same announcement confirmed increases to the National Minimum Wage and National Living Wage from 1 April 2022, which the government said would benefit around 2.5 million UK workers¹. The National Living Wage, the minimum wage for over 23 year olds, moved up to £9.50 an hour, a 6.6% increase from £8.91¹. The government said this amounts to a £1,000 a year pay rise for full time workers, and that the yearly earnings of a full-time worker on the National Living Wage will have increased by over £5,000 since the rate was introduced in April 2016¹.

The Business Secretary, Kwasi Kwarteng, said:

The government also said it will launch a communications campaign in the coming weeks to increase understanding among minimum and living wage earners about the wages they are legally entitled to and the steps they can take if they are concerned they are being underpaid¹. The new rates were announced at the Chancellor's Spending Review 2021 and recommended by the independent Low Pay Commission¹. The government said it is committed to the target of the National Living Wage reaching two-thirds of median earnings by 2024, and that this increase means it is on track to meet that¹.

Why it matters for households

The Warm Home Discount extension to 2025/2026 means the scheme is set to continue beyond the period previously announced, with around £3 million low-income and vulnerable households a year expected to receive support with energy costs¹. The Energy Company Obligation funding of £1 billion a year until 2026 is directed at energy efficiency upgrades in 450,000 homes, with an average £300 cut in energy bills cited¹.

For households in England in Council Tax Bands A to D, the £150 rebate was paid from 1 April 2022¹. The £200 reduction in energy bills through the Energy Bills Support Scheme applies to all households from October 2022¹. The government said the majority of households would receive £350 in total from these measures¹.

Workers on the minimum wage rates saw the new hourly figures apply from 1 April 2022, with the government estimating around 2.5 million people affected¹. The government's regional breakdown of people on the National Living Wage or National Minimum Wage lists 295,000 in the north west, 284,000 in the south east, 256,000 in the West Midlands, 236,000 in Yorkshire and Humber, 219,000 in the south west, 214,000 in the East Midlands, 212,000 in London, 209,000 in the East, 174,000 in Scotland, 138,000 in Northern Ireland, 122,000 in Wales and 113,000 in the north east¹.

What happens next

The Energy Company Obligation funding runs until 2026 and the Warm Homes Discount until 2025/2026¹. The £200 Energy Bills Support Scheme reduction applies from October 2022¹. The government said it will launch a communications campaign in the coming weeks on minimum wage entitlements¹. It also published this year's remit to the Low Pay Commission, asking for recommendations later in 2022 on minimum wage rates to apply from April 2023¹.