Pension Age Winter Heating Payment (PAWHP): consultation

Section 1 – Background

1.1 Policy Development

In July 2016 the Scottish Government launched a public consultation to inform the content of the Social Security (Scotland) Act 2018.

The consultation set out a vision and key principles for social security in Scotland. The consultation was in three parts, covering:

• A Principled Approach;
• The Devolved Benefits; and
• Operational Policy.

Some of the themes highlighted by respondents on winter heating benefits included:

• In general respondents supported a broad continuation of the current eligibility criteria.
• Whether the delivery of Winter Fuel Payment (WFP) could be improved, particularly for households in remote rural and island communities that are not on the gas grid.
• Whether the way that cold weather events are identified could be improved, for example by considering whether the number of weather mapping points should be increased or if the effects of wind chill could be better recognised.

The Scottish Government have since introduced Child Winter Heating Payment (CWHP, previously known Child Winter Heating Assistance) in winter 2020 and Winter Heating Payment (WHP), which replaced the UK Government’s Cold Weather Payment (CWP) in February 2023.

This consultation aims to build on the views in relation to WFP focusing specifically on the introduction of our Pension Age Winter Heating Payment (PAWHP), which will replace WFP in Scotland in winter 2024.

The Scottish Government believes that understanding and learning from the experiences of individuals and organisations that come into contact with the current benefits system is vital to help us develop PAWHP with dignity, fairness and respect.

The Scottish Government set up the innovative Social Security Experience Panels in 2017. Over 2,400 people who have recent experience of receiving at least one of the benefits devolved to Scotland registered to take part in the Experience Panels when they were launched. These people are instrumental in shaping the policy and design of winter heating benefits in Scotland, providing input to our research, through their views and opinions, which will inform our processes from end to end. The Experience Panels research on winter heating benefits was undertaken between February and March 2020 and covered the following areas:

• Experiences and understanding of the existing WFP and CWP
• Accessing support and information on heating your home
• How WFP and CWP could be improved
• The impact of individual circumstances such as energy/connection type
• Communications about WFP and CWP

The full report can be found on the Scottish Government website at: Social Security experience panels: cold spell and winter fuel payment – report - gov.scot (www.gov.scot)

We also set up and met with the Winter Heating Benefits Reference Group which was established in October 2020. The group has contributed ideas and views on our approach to devolving winter heating benefits to Scotland. They have helped gather evidence, bringing a variety of informed perspectives and providing feedback on proposals, including:

• Recipients will have a positive experience of Scotland’s social security system
• Clear eligibility rules that are easily understood
• Benefits are paid automatically to those who are eligible within agreed timescales

Building on our work with Experience Panels we are now keen to gather further views of people with a working knowledge of social security, including WFP. The Scottish Commission on Social Security (SCoSS) has been established and will scrutinise the PAWHP regulations which will be drafted with consideration to feedback from this consultation.

1.2 Legislative Powers

The Scotland Act 2016 devolved certain powers over social security to Scottish Ministers, which included powers to create new benefits.

Following the Scotland Act 2016, the Social Security (Scotland) Act 2018 created the legal framework under which social security assistance will be given to people by the Scottish Government, which includes new winter heating benefits. Section 30 of the Social Security (Scotland) Act 2018 authorises the Scottish Ministers to make provision by way of regulations for assistance to help an individual to meet, or help towards meeting, the individual’s heating costs during the winter months. This provides Scottish Ministers with the opportunity to take responsibility for WFP and ensure dignity and respect is at the core to its approach.

As we have been developing the law that will underpin how Social Security will be delivered in Scotland, we provided a series of position papers to the Scottish Parliament’s Social Security Committee setting out current policy thinking on key matters, including winter heating benefits. The Cold Spell and Winter Heating Assistance: policy position paper, published on 28^th February 2019, outlined the commitment of the Scottish Government to replace WFP with ‘Winter Heating Assistance’, now known as ‘PAWHP’. The commitment included that:

• no-one will lose out when the Scottish Government takes responsibility for PAWHP
• there are no plans to change the current eligibility criteria
• there are no plans to change the amount paid
• we will not means test or tax the payment

Therefore, our intention had been to introduce our replacement for WFP in winter 2021. This work was paused due to COVID-19 and the priority of introducing the Scottish Child Payment (SCP).

Following a period of review Scottish Ministers considered the best approach for delivery. Consideration was given at this time on alternative approaches to delivery, including:

• a flat rate payment
• an application-based scheme
• a move away from a universal scheme, with more specific targeting on fuel poor pensioners and on others experiencing fuel poverty
• using the funding towards increasing the value of the Warm Home Discounts scheme

Scottish Ministers have been consistent in committing to a safe and secure transfer of this benefit, following launch of WHP in February 2023.

PAWHP will form part of a suite of winter heating benefits delivered by Social Security Scotland. A brand new benefit, CWHP, which extended eligibility for WFPs to help mitigate the additional heating costs that the households of the most severely disabled children and young people face in the winter months, has already been introduced in 2020. WHP, which replaced CWPs in Scotland, launched in February 2023 with a guaranteed payment each winter, targeting low income households who have additional need for heat, including households with young children, disabled people and older people, providing stable, reliable support every winter.

The Scottish Government is focussed on delivering PAWHP safely and securely and ensuring pensioners continue to receive this vital support each winter, whilst considering potential improvements that could be implemented before or after the launch in 2024.

1.3 Key Considerations

There are practical delivery and affordability considerations that will have to be appropriately considered when developing PAWHP. These include:

Affordability

The Scottish Government’s primary consideration is always about providing the right level of financial support to those who are entitled to it. However, it is also important to consider to what extent changes might result in increased spending.

The Scottish Government will receive funding from the UK Government through the Block Grant Adjustment (BGA) and it is expected this will cover the benefit expenditure for PAWHP on the basis of a like-for-like delivery. The delivery is therefore subject to continued availability of resources. If we were to make further changes, which mean either that more people will receive PAWHP or higher payments, then any resulting increase in expenditure would need to be met from the largely fixed Scottish Budget. Alternatively, if the UK Government reduced WFP eligibility, this would result in a lower BGA transfer and a consequent pressure for the Scottish Government. The Scottish Government’s ability to make significant changes to the eligibility criteria must be balanced against the potential costs and challenging economic situation. Whilst the Scottish Government has some limited powers over social security and taxation, we must carefully balance priorities for spending within the context of our largely fixed budget.

Achieving value for money is a key consideration in our policy development process. It is enshrined as a principle within the Social Security (Scotland) Act 2018 and further defined in our Charter^[1]. As we continue to balance the Scottish budget, challenging decisions will need to be made regarding any new policy suggestions, ensuring that any new changes are affordable and deliver value for money for the public purse.

Social security budgets are demand-led and, once we have agreed who is entitled to a particular benefit, we will pay any eligible person who applies. Any changes that will increase future benefit spending will mean the Scottish Government would need to find the money for those changes. We will need to decide how affordable and sustainable any changes are as part of our wider budget setting process.

Deliverability

We are working to an 18 month technical and organisational development and delivery plan, to ensure the correct amount of support is paid to eligible clients. Potentially very small changes to any of our benefits can have a significant impact in areas of service delivery. Making more significant changes could take longer to implement, depending upon the scale and complexity of those changes. This is particularly significant with PAWHP as it will be introducing the largest caseload, of around 1 million clients, to Social Security Scotland since the launch of the agency. Taken together, complex issues regarding affordability and deliverability will be taken into consideration when developing the policy.