Baroness Coffey (Con)

My Lords, I thank the Minister for presenting the draft regulations before us. I am conscious that this is not her department. Nevertheless, with her Cumbrian background—not just background but experience—she will be conscious of the number of families in fuel poverty, in particular those off the gas grid. One of the challenges around the warm home discount is that it is focused solely on electricity bill payers, so there are some issues there around aspects of fuel poverty and how it gets distributed. I am conscious that it has generally been a success; I am going to sound a note of caution though. This looks like a potentially generous package. Of course it is: it is the second, if not the third, package brought in by this Government that is very generous to households that receive universal credit. We have seen the extension of free school meals. With the Royal Assent coming through today, we will see a big uplift for everybody who is on universal credit. I think that the Government underestimated how much all this is going to cost, partly in the impact assessment for the Act that has just gone through but also in these regulations. Even now, there are more people on universal credit than it seems has been considered by the impact assessment for these draft regulations. There is also a different way of thinking about this. These measures are increasing incentives for people not to increase their earnings and to stay on universal credit as long as they can. That is part of what the Government need to think about in these regulations. There is another oddity here. Changing the criteria will mean the number of households receiving the discount rising from an estimated 3.4 million—around 3.1 million in England and around 300,000 in Scotland —to an estimated 6.1 million, although I think that it will be a lot more and it will, therefore, cost a lot more. People’s average energy bills will go up by about two-thirds, but everybody pays that levy. Consequently, those estimated 3.4 million people will be worse off as a consequence of the rebate now applying to a lot more people. Before, the cost of the levy was estimated at £22. The net effect is £150 minus £22, which is £128. With the average levy now going up to £37 a year, the logical consequence is of that benefit ending up dropping to £113 per household. I appreciate that the finer points may not work out quite like that in some of the calculations, but the Government cannot do this in a very detailed way. So we are in this odd situation where those households with the highest estimated energy costs will get less rebate to help them; I do not understand how that is going to help fuel poverty. I appreciate, by the way, that the Minister does not have policy responsibility here. I am not sure what sort of response I might get from DESNZ, but it would be quite useful to get some thinking on that. The reason why I think the costs here have been underestimated is that, in May this year, the UC statistics showed that 6.6 million households were on universal credit, 6.1 million of which are getting payments. That is not simply the transfer from existing legacy benefits to universal credit; there is an element of that, but that number will continue to increase because people are still claiming universal credit. On top of that, there are around 1.4 million people receiving pension credit and around 1.1 million pensioners receiving housing benefit. This is why the figures start to get bigger and bigger. There will undoubtedly be an overlap between the 1.4 million on pension credit and the 1.1 million on housing benefit; nevertheless, this will show, I think, that the costs here have been underestimated. I fear that the levy will, in effect, be higher for other bill payers. It is not the same as the winter fuel payment, because that came from taxpayers—this is coming from every bill payer. I should also point out to noble Lords, based on a response to an Answer, that there are 200,000 households on universal credit with an income of more than £35,000. They will continue to receive this benefit now. The brilliant DWP—I love it so much—is fantastic at getting the matching. So I would be grateful to understand why DESNZ estimates that 28% of the 8.1 million people it thinks are eligible for this will not receive the warm home discount due to data-matching. Surely more should be done to kick the energy companies. I am concerned that park home residents are excluded. They are a particular group who have a nice life but tend to be on pretty low incomes, but I understand some of the complexities. I found it astonishing in a different way, although it was perhaps a bit welcome, that there was a 150% uplift of people receiving this in London compared to the rest of the country. That is pretty high, given that more than double the number of households in the south-east will receive this. Clearly, this has not necessarily been done on what might be considered traditional regional adjustments. It is important also, regarding aspects in annexe 5 of the assessments, that the NHS estimates that the preventable costs would be about £540 million. Now the cost on these bills is going up to £1 billion, but I am convinced it will be more like £1.1 or £1.2 billion. Of course I am not going to try and vote down this instrument, because that is not what we do in the Lords. I wish I had spotted the consultation earlier so that I could have contributed then but, when we come to the post-implementation review of the regulations in a few years’ time, the figures will be telling and Ministers should be looking out for this a lot more quickly. Genuinely, the impact will be that benefits from this levy will decrease, as opposed to increase.