Pension Age Winter Heating Payment: Island Communities Impact Assessment (ICIA)

Policy Background

14. In July 2016 the Scottish Government launched a public consultation which went on to inform the content of the Social Security (Scotland) Act 2018. This legislation provided Scottish Ministers with the legislative power to deliver new Winter Heating Assistance in Scotland, with the intention of replacing the UK Government’s Cold Weather Payment (CWP) and WFPs.

15. In 2020 we launched ‘Child Winter Heating Payment’ (CWHP, previously Child Winter Heating Assistance) which extended eligibility for WFP to help mitigate the additional heating costs that the households of the most severely disabled children and young people face in the winter months.

16. In February 2023, we launched ‘Winter Heating Payment’ (WHP), replacing CWP in Scotland 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.

17. We now intend to introduce PAWHP on terms equivalent to the UK Governments WFP, where the payment will be delivered by DWP this winter under an agency agreement. This will provide continued support to help meet increased heating costs during the winter to those who have reached the state pension age and are on relevant benefits.

18. Our proposed new benefit will be delivered, on behalf of Scottish Ministers by DWP this winter under an agency agreement with Social Security Scotland delivering the payment from winter 25/26. Our intention is that this payment will be tax free, and will provide payments of either £200 or £300 to help older people on relevant benefits meet their heating costs during the winter months. The relevant benefits include Pension Credit, Universal Credit, income-related Employment and Support Allowance (ESA), income-based Jobseeker’s Allowance (JSA), Income Support, Working Tax Credit and Child Tax Credit.

19. PAWHP will provide an investment this year of around £30 million, providing a payment to between 110,000 and 130,000 pensioners recipients above the state pension age and on eligible benefits this winter.

20. The policy aligns closely with the Scottish Government’s Summary of Strategic Objectives^[5], but also links with the Scottish Governments key priorities to tackle fuel poverty, ensuring financial security in older age, as well as supporting people through the cost-of-living crisis.

21. The Scottish Government is committed under the ‘Fairer Scotland for Older People’ strategy to seek to ensure the financial security of older people in Scotland. PAWHP will contribute to that ambition together with a wider range of initiatives to mitigate fuel poverty, such as our energy efficiency delivery programmes – Warmer Homes Scotland and Area Based Schemes – which have supported over 150,000 households living in, or at risk of fuel poverty in the past decade, as well as our Islands Cost Crisis Emergency Fund which helps island authorities support their island communities through cost-of-living pressures. Additional support through Winter Heating Payment is available to pensioners in receipt of Pension Credit.

22. Support in addition to social security payments, and the support mentioned above, is available through the Scottish Governments investment in our Council Tax Reduction Scheme and free bus travel for all older people over the age of 60 in Scotland. The Scottish Government has also provided over £2 million from our Equality and Human Rights Fund, supporting older people’s organisations to deliver work focused on tackling inequality and enabling older people to live independent and fulfilling lives.

23. The Scottish Government continues to support vulnerable households from fuel poverty through a range of actions within our limited devolved powers. This year alone, we are spending £134 million on activities to mitigate UK Government policies through schemes such as Discretionary Housing Payments and the Scottish Welfare Fund, which provide vital support to households struggling to meet their housing and energy costs.

24. The Scottish Government is committed to tackling fuel poverty and has consistently supported vulnerable households through a range of actions, including delivering our Winter Heating Payment which, in contrast to the UK Governments Cold Weather Payment, guarantees a reliable annual payment of £58.75 to people on low-incomes, including those pensioners in receipt of Pension Credit each winter.

25. Similarly, ending child poverty is our single greatest priority. We’ve already consistently up-rated all benefits in line with inflation, and our intention now is to provide certainty to families and put more money in their pockets by making it a legal requirement to annually up-rate all devolved benefits – including Best Start Grants, Best Start Foods and our winter heating payments. This is an estimated investment of at least £6 million for 2025-26, rising to at least £12 million in 2029-30, according to the latest published SFC forecasts. The Minister for Climate Action has also secured the agreement of energy suppliers to participate in a working group aimed at co-designing a social tariff.

26. PAWHP contributes to the following National Outcomes:

• Economy: We have a globally competitive, entrepreneurial, inclusive and sustainable economy. This policy will provide continued investment in financial support for older people on low incomes in Scotland.
• Communities: We live in communities that are inclusive, empowered, resilient and safe. This additional support recognises older people on low incomes have particular needs in relation to heating and will help towards ensuring older people communities are living in a warm home.
• Health: We are healthy and active. The policy may reassure vulnerable older people on low incomes that they can afford to maintain a safe temperature at home during the winter, reducing the health risks due to living in cold environments.
• Human Rights: We respect, protect, and fulfil human rights and live free from discrimination. Social Security is a human right and through provision of a new benefit we help progress the support that is available.
• Poverty: We tackle poverty by sharing opportunities, wealth and power more equally. The policy intention of PAWHP is to provide financial support to people of pension age on low incomes who have a greater need for heat during the winter months. PAWHP specifically targets households who are on a low income and, due to their age, may require an enhanced heating regime, and therefore may incur greater energy costs (between 110,000 and 130,000 older people living in Scotland).

27. Delivery of PAWHP is scheduled for winter 2024 which will be delivered by the DWP under an Agency Agreement. It will then be delivered by Social Security Scotland in Winter 25/26.