George Osborne has overruled energy minister Amber Rudd by vetoing changes to the government’s £320m scheme tackling fuel poverty that would have targeted it better at the neediest families, leaked emails show.

Rudd is often regarded as a close ally of the chancellor, but the two clashed during March over changes to the warm home discount (WHD), which is administered by energy providers and provides a £140 rebate to help poorer households pay their bills.

Emails from the energy secretary’s advisers said: “Amber feels very strongly about getting this right and it is central to our message on getting help to the most vulnerable rather than the middle class”.

Rudd wanted to use data held by the Department of Work and Pensions to ensure that the limited pot of cash went to households in genuine fuel poverty – and she had hoped to make an announcement on the idea last month.

But when her advisers raised the proposals with the Treasury, they were firmly told the chancellor was “unconvinced of the need to change a system that works”, despite the fact that, as energy department insiders pointed out, just 15% of people who receiving the discount are fuel poor.

“We think it is right that we push this to the people who need it most beyond pensioners,” the department said. But they were told the chancellor “can’t approve changes to a successful scheme without having a clear idea of how many losers this will create and who those losers will be”.

Separately, a letter from junior Treasury minister Damian Hinds showed that he is unwilling to let any changes be made to the scheme for the coming year. Instead, he warns that any published proposals should be kept “high level”.

The discussions between the two departments, which also involved the Cabinet Office, which would have to give the go-ahead for data-matching, went on during March, both before and after the budget.

Households are considered to be in fuel poverty if their energy costs are higher than average – because their home is badly insulated, for example – and were they to spend that amount on energy, they would be left with a residual income below the official poverty line. Official figures suggest there are currently just over 2.3 million households living in fuel poverty in England.

A “core” group of poor pensioners – those in receipt of pension credit guarantee – receive the discount automatically, but others who struggle to afford their fuel bills must submit an application form to their utility provider in the summer.

Campaigners complain that many families are not aware that the scheme is available, and firms have too much latitude in deciding which eligible households will receive the payments, sometimes on a first-come-first-served basis. The energy department was proposing to protect the group, but target payments to the wider scheme more effectively.

Dan Goss, of campaign group Fuel Poverty Action, said: “[The discount is] not well targeted at all: lots of low-income, working households don’t get it.”

But despite the strong desire in department to use public data to target the funds better, the Treasury appears to have been concerned that reallocating it towards the poorest households would create “losers”, by depriving current recipients.

The row underlines the challenges facing the Conservative party in achieving the deep cuts to public spending required to meet the chancellor’s target of achieving a surplus on the public finances by 2020 while avoiding political pitfalls.

Osborne was castigated – including by departing work and pensions secretary Iain Duncan Smith – for plans to cut personal income payments for disabled people in the budget, which he said were “not defensible in the way they were placed within a budget that benefits higher earning taxpayers”.

Shadow energy minister Lisa Nandy said: “When thousands of people died last winter in cold homes, it’s outrageous that George Osborne blocked plans to focus help on families who most need it. The chancellor’s complete indifference to Britain’s poorest families may be no surprise, but it’s revealing that Iain Duncan Smith isn’t the only one of his cabinet colleagues to think his policies are deeply unfair.”

As drafts of the consultation document passed back and forth, a section was struck out that said: “Subject to positive progress on data sharing legislation, government plans to consult later this year on whether these data-matching powers should be used for a scheme from 2017-18 onwards.”

The final document instead simply promised to “consult on future measures to streamline delivery and to consider whether there are ways to better support fuel poor households in greatest need”.

That appeared to contradict promises by energy minister Andrea Leadsom, who said in response to a written question from Labour MP Rushanara Ali earlier this year that energy department was working on ways of improving both the deposit and the larger energy company obligation scheme, which pays for insulation and other efficiency measures.

A government spokesperson said: “We’re consulting on minor changes to a successful scheme that is helping to reduce fuel poverty in the UK, to make it more effective.

“This is not a radical change to policy. These are sensible proposals on how to improve the scheme and the consultation is open now for everyone to tell us their views.”

This article was amended on 18 April 2016 to correct the first name of the energy minister to Andrea, not Angela, Leadsom.





