Pension Age Winter Heating Payment (PAWHP): consultation analysis

5. Receiving the payment

This chapter covers different aspects of how people will receive PAWHP. Respondents were asked whether a cash payment, paid through the system that processes other benefits and the state pension, is the best option, and whether an annual one-off payment is most convenient. The consultation also considered clients’ ability to opt-out of receiving PAWHP, which is an option for the existing DWP-administered WFP.

Q10. Do you agree or disagree with the proposal for PAWHP to be given to clients in the form of a cash payment and not another form? Please provide further information on why you agree or disagree.

There was broad support for a cash payment. Almost three quarters (74%) of those who answered agreed, as did 74% of individuals. All but one organisation who answered agreed (94%); this was the joint highest level of support recorded by organisations across the consultation.

While many individuals disagreed with a cash payment in the closed question, their open comments suggest they did support the proposal. Having interpreted the question literally, these respondents assumed that clients would be given cash directly and noted their preference for payment by a bank transfer or alongside the state pension.

Agree with cash payment

Just over half of respondents provided an open answer in Q10. The most common theme, mentioned by nearly two fifths, was agreement with a cash payment. This includes those who disagreed at the closed question but supported a cash payment in their comment. Those who elaborated suggested that a cash payment made alongside other benefit or state pension payments was simple and efficient, reducing confusion and bureaucracy.

Many respondents supported a cash payment as they felt it provided clients freedom to spend it as they wished. Some noted that clients may use it to buy warm jumpers, electric blankets or alternative fuels not offered by energy suppliers. Similarly, some others noted that cash payment provided clients with dignity.

“Cash has the greatest benefit for individuals, allows choice, reduces any risk of stigma and is the approach most aligned with the Scottish social security principles of treating individuals with dignity and respect.” - Child Poverty Action Group in Scotland

Some respondents expressed concerns that another form of payment, e.g. directly to energy suppliers, may be less cost-effective for the Scottish Government to administer or negatively impact Social Security Scotland's workload.

A small number of respondents cited other reasons for agreeing, including a general distrust of energy suppliers, a belief that cash payments are best for remote rural and island households using alternative heating sources, and concerns that other types of payment would require new forms or applications.

Direct payments to energy suppliers

Payments directly into eligible clients’ energy accounts were suggested by many individuals. Different reasons were given for taking this approach. Some supported both cash payments or payments directly to energy suppliers but did not highlight why or which was preferred. Those who solely supported payments to energy suppliers expressed a concern that PAWHP may not be used to pay for heating costs, and this was a way to ensure the money was spent as intended. A few others suggested that payments directly to energy suppliers may have a greater impact on those in fuel poverty.

Although all organisations who left an open comment agreed with a cash payment, two suggested that there could still be benefits from other approaches, for example, that payments directly to energy suppliers may have a greater impact on those in fuel poverty.

“Energy Action Scotland notes that had the payment been made directly to nominated energy suppliers, due to the nature of the calculation of fuel poverty as defined in the Fuel Poverty Act 2019, this would have a bigger fuel poverty-reducing factor than when a cash payment is provided. The government may believe that it is cost-prohibitive to make payments directly with suppliers in this way, but nonetheless, this is a feature of cash payment to beneficiaries over direct energy payments to suppliers.” – Energy Action Scotland

“This seems a reasonable approach to offer financial support to those who require help with heating costs. However, in the long-term other measures such as money off or reductions in energy bills may provide welcome relief for some as a direct benefit, particularly for households with disabled people.” - RNIB

While not answering the question directly, several individuals expressed concern that payments may not go toward heating. However, they did not say if they preferred payment by cash or in another way.

Personal Preference

Some respondents suggested that the payment method should be left to the client to decide. Respondents noted that some people may not have a bank account or understand online banking platforms.

“We agree with support through cash payments, although we would hope that consideration be given to those who do not utilise traditional banking. For instance, a study in 2015 from interviewing people from the Gypsy/Traveller community in 2015 showed 20% of those interviewed did not have bank accounts. This demonstrates the importance of having flexible payment arrangements to ensure that nobody is unfairly disadvantaged.” - National Carer Organisations

Q11. Do you agree or disagree with the proposal to pay PAWHP as an annual one-off payment each winter? Please provide further information on why you agree or disagree.

This proposal recorded the highest level of agreement in the consultation. Among those who answered, 88% of all respondents and 87% of individuals agreed. Almost all organisations who answered agreed (94%), while 6% were unsure and none disagreed, meaning this was the joint highest level of support recorded by organisations.

Winter is the most appropriate time

Over two fifths left a comment in Q11. The most prevalent theme was agreement that a payment each winter is most appropriate. Many respondents focused on the timing of the payment, rather than whether it should be a one-off payment, noting that winter is when a payment is needed most due to colder temperatures, greater demand for heating and higher bills. In addition to this theme, several respondents repeated the recurring theme of the overall need for a payment which supports older people to heat their homes.

“Ensures the benefit is available at the most appropriate time of year.” – Individual

“It should be paid just in advance of the likely need to use it for warmth.” - Individual

Efficient administration

The second most prevalent theme was agreement with a one-off payment because it is the most efficient way to administer it. The approach was described as simple, easy, cost-effective, straightforward and sensible, with a few noting that this would minimise administrative costs and bank charges. Similarly, others argued that split payments would add to administration costs.

“Agree as this would be more effective to administer and would be more effective for the client to get a lump sum around the time that energy prices increase.” – Stirling Council

Keep the current process

Many respondents agreed with the proposal for a one-off payment as this is the way the payment is currently made. They reflected that this process works well and is familiar to clients and therefore argued that there is no need to change from the existing approach.

Provides a predictable source of income

Several respondents, including Independent Age, agreed with a one-off payment at the start of winter as they felt it provided reassurance to clients. They suggested that one upfront payment means clients know they have support to cover their heating costs and allows them to plan ahead in terms of both how they will heat their home and budget to pay their bills. A few argued that this was the least confusing approach and reduced any worries about budgets. A few individuals and The ALLIANCE stressed that payment should be made as early as possible in the winter

Similarly, a small number agreed because they felt a one-off payment empowers individuals with autonomy and flexibility over how they use the payment.

“As someone having two pain conditions, having such an additional payment at this time of year, gives me the flexibility, and confidence, to use a bit more energy, for my benefit. There really is only so much that extra layers can do.” - Individual

Regular or monthly payments

Some respondents advocated for more regular payments instead of a one-off payment. Suggestions included monthly payments, multiple payments at the start, during and end of winter, or at times when temperatures are lowest. Those who explained their reasoning suggested that more regular payments would be better for budgeting.

Two payments

A call for two payments was made by some respondents. Most suggested that one payment should be made at the usual time, with a second payment either in January/February or at the end of winter, to cover bills received later in the winter.

“I would prefer it was in two payments (November and January), but I'm sure this would be more expensive to administer. The coldest weather is in January and February, and the money could have run out by then.” - Individual

Ensuring the payment is used for heating

Mixed views were expressed by some respondents about whether a one-off or split payment is most effective in ensuring the money is used on heating and not for other purposes. Some argued that one payment at the start of winter makes the purpose of the payment clear, whereas multiple payments could be absorbed into general finances and spent on other things. Conversely, others argued that there could be a temptation to spend a one-off payment straight away, or it could be more challenging to manage, whereas a split payment could ensure regular support.

“Although a little more complex to set up; it would probably be better paid out in instalments. Better for budgeting, and takes away the temptation to spend it all at once for some people - who may then suffer as a result.” - Individual

Less commonly mentioned themes

Other points each raised by a small number of respondents included:

• If the payment was split, the separate payments would be too small to benefit clients or may not be enough to pay a bill.
• A call for greater consideration of extreme cold weather, which could increase the need for a second or supplementary payment.
• The best option would depend on people’s circumstances. National Carer Organisations suggested that people could be able to choose between one or multiple payments to best meet their needs.
• One individual suggested that eligible clients should be advised of the payment in November or December, but paid towards the end of the winter.

Q12. Do you agree or disagree with the proposals for providing a way for people to opt-out of receiving PAWHP? Please provide further information on why you agree or disagree.

Over three fifths (64%) of all respondents and individuals who answered agreed with the proposals for opting-out of PAWHP, while 16% disagreed and 20% were unsure. While agreement was higher among organisations who answered (76%), 18% disagreed and 6% were unsure.

Agree with the opt-out option

Half of respondents provided an open comment in Q12. The most prevalent theme, raised by over half of those who answered, was support for an option to opt-out of receiving PAWHP. Many did not expand on their reasons for support, but others agreed and suggested how the opt-out system could be improved.

Some suggested that the funds left after clients opt-out of PAWHP should be ringfenced for other related purposes. Suggestions included donating the funds to charities, donating to food banks, adding the funds to the benefits system to increase the amounts received by clients on lower incomes, redirecting the money to the NHS, and funding programmes that improve home energy efficiency. Age Scotland recommended that the funds be directed toward dedicated services for older people.

“If people don’t need it, there should be an option to donate it to a fuel poverty initiative, energy efficiency programs or similar.” - Individual

There was a recommendation that when people opt-out, they should be offered an option to donate the money directly to a charity or cause of their choice. One respondent emphasised that they did not believe the funds should return to the government budget.

Clear communication about the opt-out option was highlighted as necessary by some. A few individuals acknowledged having never known about the existing opt-out from WFP. The ALLIANCE suggested that there should be a reminder of eligibility annually or every other year for those who have opted-out to allow them to opt back in if their circumstances change. In contrast, a few respondents suggested that clients should only be able to opt-out for one year and be re-enrolled automatically for future years.

“Independent Age support the option of having an ‘opt-out’ mechanism. However, we believe those who ‘opt-out’ should not have to ‘opt-in’ to receive the payment again but rather should be required to opt-out each year. This is important in ensuring that people receive the payment because they failed to opt-out rather than someone who is in desperate need of the payment missing out because they forgot to opt back in.” – Independent Age

Opting-out vs. a means-tested benefit

Many respondents combined the question about an opt-out option with whether PAWHP should be a universal benefit or means tested. Many who disagreed at Q12 stated they believed that PAWHP is an earned benefit that all people of state pension age should receive. They expressed a view that there should not be an opt-out option as the payment should be given to everyone and it should be up to clients to decide what to do with the money once they have it. Some noted that those who do not need the payment could donate it, with a few specifically highlighting the tax benefit in doing so.

“Everyone eligible should receive the payment; it is then up to them how it is spent. They can use it to help pay for their heating or perhaps give that amount to a charity of their choice.” – Individual

A few individuals disagreed with an opt-out option, noting a concern that vulnerable people who need the payment may opt-out due to pride or a belief they were not deserving, thus defeating the point of the universal benefit. This was echoed by Energy Action Scotland.

“I am aware of some people who do not keep their current payment but donate it to charity. There are some people who would benefit from the payment but due to pride and a reluctance to receive benefits may opt out. It would likely be administratively cheaper and easier to pay it to everyone.” - Individual

A small number of respondents who disagreed were concerned that the opt-out option could lead to a means-tested benefit in the future. Some others agreed with the opt-out option, emphasising the importance of keeping the opt-out voluntary, i.e. not moving toward means testing.

A few respondents expressed support for means-testing; this includes a mix of those who agreed, disagreed, and were unsure about the opt-out. They expressed a view that testing would ensure that people who do not need PAWHP do not receive it, or as Energy Action Scotland argued, that using means testing would ensure the funds reach the households most in need.

“Energy Action Scotland is concerned that the opt-out retains the potential for well-meaning lower-income households to relinquish important financial support. Should the payment be more closely linked to income or additional need then it would increase the likelihood that those that need support get it… It would appear that it is more tax efficient for wealthier households to donate an equivalent level payment to a charity that is registered for Gift Aid as any funds donated would increase by 25%. However, relying on the largesse of wealthier households to pass through an equivalent payment is not in any way a substitute for a well-designed and targeted support through the benefits system.” – Energy Action Scotland

Administrative costs

The administrative costs of allowing an opt-out option were raised by some respondents who both agreed, disagreed or were unsure of the proposal. Some thought that allowing clients to opt-out may incur a greater cost to the government than the benefit was worth.

“If someone really doesn't want it, the equivalent money can be donated to an appropriate charity. The administration involved in allowing someone to opt out would cost more money.” - Individual