Pension Age Winter Heating Payment (PAWHP): consultation analysis

9. Future developments

While most of the consultation questions asked respondents to consider PAWHP as a like-for-like replacement to the existing benefit, Q2c was also included to allow stakeholders to express their views on how PAWHP could be made more effective in the future.

Q2c. Do you have any further comment on the potential longer term development of this benefit in order to provide the most effective support?

Half of respondents provided a substantive comment in response to Q2c; several other respondents stated they had nothing further to add. A range of issues were raised by those who commented, covering both suggestions for improvements to PAWHP and other themes related to support for older people and tackling fuel poverty. Many also reiterated their calls not to change the existing WFP.

Keep the benefit universal

The most prevalent theme raised by many individuals was to keep the benefit universal. Fears were expressed that, over time, means testing could be introduced. Reasons cited for not wanting the benefit to be means tested were that many people of pension age were only just above the threshold for benefits and were struggling to pay their bills, that people who had worked hard throughout their lives were disadvantaged by means testing, and that it would be costly for the government to apply means testing in practice.

“It should not be limited to those on pension credit as the threshold to receive that benefit is so low and non-tapered, leaving those with a few pounds over the qualifying threshold thousands of pounds poorer than those that receive all the pension credit benefits.” - Individual

Link to inflation or fuel costs

Several individuals and South Lanarkshire Council called for the payment value to rise in line with inflation or rising fuel costs. Comments were generally brief, but the main reason was to ensure the payment kept its value over time. Comments were made that the value of the payment has been eroded over time as it has not been linked to increasing prices.

More effective targeting

Targeting funds used for PAWHP to particular groups, rather than a universal approach, was advocated by several respondents. This included five organisations that called for the benefit to be targeted more effectively at those in fuel poverty: Energy Saving Trust, Energy Action Scotland, Inclusion Scotland, Consumer Scotland and Shetland Islands Council. For example, Consumer Scotland recommended that “the Scottish Government should undertake feasibility and scoping work during 2024 to identify options for how a more targeted approach could work in practice”. However, Inclusion Scotland noted that the rising energy costs had exacerbated the cost-of-living crisis, and therefore, now is not the right time to make such changes.

“Energy Action Scotland believes that this payment should provide better targeted support to older households, supporting people to achieve higher levels of warmth for longer hours. This is consistent with the heating regimes identified in the Fuel Poverty (Definition, Targets and Strategy) (Scotland) Act 2019. Whilst the consultation implies that the funding is not solely a fuel poverty measure it is only true because of the poor targeting of the current payment. The Pension Age Winter Heating Payment has huge potential to be an effective fuel poverty-reducing measure… This could take the form of means testing or consideration of payments in relation to the Scottish Income Tax Bands. As it stands, the payment rationale based on the conditions that existed when introduced in 1997 has changed significantly, yet there was a reconsideration of the payment and its outcomes by the UK Government. If the PAWHP is introduced to replace the Winter Fuel Payment without any changes, this would be a considerably missed opportunity.” – Energy Action Scotland

The Scottish Fuel Poverty Advisory Panel submitted a detailed response outlining why there is a need for an alternative approach, and how this could be introduced in the short-and long-term. They expressed a view that a replacement benefit should be targeted, not universal, and underpinned by data analysis to determine where the payment would have the most impact. They also suggested that the three existing winter weather payments - Winter Heating Payment, WFP (to become PAWHP), and the Warm Homes’ Discount - should be consolidated. Both these suggestions were supported by the Poverty and Inequality Commission in their response.

“This approach is regressive and poorly targeted and will have little impact on meeting the statutory targets for reducing fuel poverty, which is the main objective of then PAWHP as stated by the Scottish Government. In order to meet this objective, the Scottish Government should replace the WFP with a progressive benefit aimed at all households experiencing fuel poverty. However, if this is not currently possible due to restrictions imposed by the Social Security Scotland Act, then the Scottish Government should consider doing the following: 1) PAWHP should be targeted at those on Pension Credit, 2) PAWHP should be aligned with the Winter Heating Payment, 3) PAWHP should be treated as taxable income. The Scottish Government has presented an argument to the UK Government to provide energy support through a windfall tax on excess profits in the energy sector. An equivalent consideration should be given to using tax revenues from PAWHP to increase levels of energy support funding in Scotland” - Scottish Fuel Poverty Advisory Panel

“While there may be other legitimate policy objectives furthered by the planned PAWHP, the Commission is clear that this cannot be considered a progressive policy instrument from an anti-poverty perspective. While non-means tested benefits can play an important role in poverty reduction efforts, this particular instrument is extraordinarily poorly targeted as regards to addressing poverty.” - Poverty and Inequality Commission

Individuals raising this issue mostly felt the benefit should be targeted at those in financial need, for instance, by means testing. Singular suggestions for how the benefit could be better targeted included: implementing a cap similar to that used for child benefit; considering savings, remote locations, single-person households, health conditions and variations in heating systems; using tiered funding levels; or supporting only those whose income is below the higher tax bracket.

“There could be a basic payment to all who qualify and an additional payment for those on the lowest income. Many benefits, like Pension Credit, give assistance to those who have the lowest income, but many have income just above the thresholds and get no further help. Extend the additional WFP to those in this category.” - Individual

Extend support to other groups

Extending the benefit to other groups was advocated by several respondents, including RNIB Scotland, The ALLIANCE, Age Scotland and Citizens Advice Scotland. All called for additional support for those with disabilities or long-term conditions, whilst the ALLIANCE also felt unpaid carers should receive support towards utility costs. Public Health Scotland suggested that consideration could be given to extending PAWHP to adults aged between 60 and state pension age. Individuals also suggested that disabled people should benefit from heating support payments, as well as those with terminal illnesses or families in need.

Citizens Advice Scotland noted that heating assistance could be accessed if a child under 19 received a qualifying benefit. However, this stopped when moving to Adult Disability Payment despite their needs not changing. They cited research findings from the Joseph Rowntree Foundation that working-age disabled people are almost twice as likely to live in poverty than those who are not (35% and 18%, respectively^[2]).

Increase state pension payments

Calls for the value of the state pension to be increased were made by some respondents. It was suggested that PAWHP could be incorporated into the pension payment, while one suggested that if pensions were not taxed, there would be no need for PAWHP and would reduce the need for benefits or subsidies. A few commented that the pension rate is lower than in comparable countries and should be increased in line with elsewhere.

Greater assistance for remote, rural or off-grid locations

Some, including four organisations, specifically highlighted that those living in remote, rural, or off-grid locations are more in need of energy support. Age Scotland highlighted that in such areas, some houses were not suitable for energy efficiency measures or needed more appropriately accredited installers. The Energy Saving Trust noted that a methodology for calculating the uplift required to achieve a minimum income standard in such areas had already been set out in Scottish Government research^[3] and suggested a similar uplift could be applied to a targeted winter heating payment. Individuals similarly highlighted that the more inclement weather, dependence on solid fuels, or housing conditions in such areas meant that fuel bills were likely to be higher for some. The issue of off-grid locations is explored in more detail under the analysis of Q5 and Q19.

“With the ever-increasing costs for fuel, this should be the subject of regular review in terms of inflation cost increases, especially for those living in more remote locations who are more likely to be affected by fluctuating fuel costs. We did consider the removal of the universalness of the scheme; however, it is recognised that some people are likely to be affected by fuel poverty in more affluent areas because of the cost of living crisis.” – Scottish Community Safety Network

Other potential developments

Some individuals called for greater controls on energy companies, generally either advocating for curbing excessive profits or calling for energy companies to be nationalised.

A number of other suggestions, each made by a few respondents, included the following, in order of prevalence:

• Take colder weather in Scotland into account i.e. provide additional assistance to those living in colder parts of Scotland
• Discount energy tariffs for older people or other potential future eligible adults.
• Keep the payment under regular review, or undertake a review with clients to check if this is the best option.
• Use the list of PAWHP clients to identify needs and communicate entitlements to other benefits.
• Make payments directly to energy companies rather than clients.
• Make the payment taxable so those on lower incomes benefit most.

“Consideration should be given to how to maximise this annual communication opportunity to older people to highlight other support available. The annual, universal communication should inform older people of income maximisation and advice services, other social security support (such as Pension Credit, Housing benefit and the Scottish Welfare Fund) as well as the energy efficiency support schemes.” – Independent Age

Other points or concerns for the future

Several individuals answered Q2c with a range of comments that focused on other concerns about the future of PAWHP rather than how it could be developed. These included concerns about the long-term ability of the Scottish Government to fund and administer the benefit, that the value of the payment could be eroded over time, and that the UK government could reduce the value of the corresponding payment, which the Scottish Government might need to replicate.

Other more general points raised by small numbers included issues around eligibility and the ability to allow people to opt-out, an explicit preference for DWP to retain control of the payment, a few expressing support for the Scottish Government and Social Security Scotland administering the benefit, a call to improve the energy efficiency of Scotland’s housing stock, and the need to provide further assistance to all older people or to specific older people, such as the very old.