Pension Age Winter Heating Payment: child rights and wellbeing impact assessment

Child Rights and Wellbeing Impact Assessment

Introduction

1. Brief Summary

Type of proposal (Please tick):

Bill / SSI

Decision of a strategic nature relating to the rights and wellbeing of children

Pension Age Winter Heating Payment

In winter 2024/25, Pension Age Winter Heating Payment (PAWHP) replaced the UK Government’s Winter Fuel Payment (WFP), a reserved benefit paid annually in November or December to individuals of state pension age in receipt of relevant benefits.

PAWHP was originally due to be launched in winter 2024/25 as a universal and tax free benefit for people of state pension age to help with heating costs during winter. It was intended that PAWHP would be a like-for-like universal replacement of the UK Government’s WFP.

In July 2024, the Chancellor of the Exchequer announced the UK Government’s intention to restrict eligibility to WFP to those in receipt of relevant benefits.

The changes to WFP eligibility reduced the Block-Grant Adjustment associated with devolution of the UK’s Winter Fuel Payment by £147 million in 2024/25, over 80% of the cost of the Scottish Government’s replacement benefit. Given this significant reduction in budget, after careful consideration of options the Scottish Government took the difficult decision to mirror the restricted eligibility of WFP for PAWHP.

For winter 2024/25, PAWHP was therefore introduced mirroring the decision to deliver WFP to those of pension age in receipt of relevant benefits. 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 Credits and Child Tax Credits (CTC).

The timing of the UK Government announcement, and the lack of consultation or discussion with the Scottish Government, meant it was not practicable for the Scottish Government to deliver PAWHP in winter 2024/25. PAWHP was therefore delivered on behalf of Scottish Ministers by the Department for Work and Pensions under an agency agreement. This approach sought to ensure that eligible individuals in Scotland continued to receive support over winter 2024/25.

However, following the restriction of WFP eligibility and the decision to mirror this approach within PAWHP, the Scottish Government has consistently acknowledged that other people of pensionable age may also face financial difficulties and would benefit from this support.

After careful consideration of the financial position for 2025/26 and the significant demands upon the SG's budget, following the UK Government’s Autumn budget, and confirmation of associated budget in Scotland, Scottish Ministers worked at pace to consider options for delivery of Pension Age Winter Heating Payment in winter 2025/26, as well as mitigations available for winter 2024/25. Scottish Ministers considered the finance available, and concluded that payments at a rate of £100 to those pensioner households not in receipt of a relevant benefit was affordable, and would go some way to supporting those households towards meeting their heating bills throughout the winter. This approach recognises many people who are not entitled to Pension Credit or other low income benefits also require support.

On 28 November 2024 the Scottish Government announced that it will bring forward regulations to introduce a universal PAWHP from winter 2025/26 onwards.

From winter 2025/26 onwards, PAWHP will be a single annual payment of £305.10 for pension aged individuals aged 80 and over who are in receipt of relevant benefits, £203.40 for pension aged individuals below the age of 80 in receipt of relevant benefits (subject to parliamentary approval of the up-rating regulations), and £100 for all other pensioner households who are not in receipt of relevant benefit

With high energy prices continuing to be a key driver of fuel poverty, this support is particularly important given the significant increase in energy prices amid the cost of living crisis.

As such, this impact assessment now considers the impact of introducing universal eligibility to PAWHP from Winter 2025/26 onwards.

The policy aligns closely with the Scottish Government’s Wealthier and Fairer Strategic Objectives, but also links with the Scottish Government’s strategic priorities to support older people and the cost of living crisis.

The policy 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, with enhanced support for those on low incomes in Scotland.
• Communities: We live in communities that are inclusive, empowered, resilient and safe. This additional support recognises older people have particular needs in relation to heating and will help towards ensuring all pensioner households, including those on low incomes, are living in a warm home.
• Health: We are healthy and active. The policy will provide reassurance to older people that they will receive a contribution towards their heating costs, helping 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 expansion of this 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 all people of pension age in Scotland because they have a greater need for heat during the winter months. PAWHP in particular specifically targets pensioner households who, due to their age, may require an enhanced heating regime, and therefore may incur greater energy costs (around one million older people living in Scotland every year).

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.

Support in addition to social security payments, and the support mentioned above, is available through the Scottish Government’s 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.

The Scottish Government continues to support vulnerable households through a range of actions within our limited devolved powers. This year alone, we are spending almost £154 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.

The Scottish Government is committed to tackling fuel poverty and continues to support vulnerable households, including via the delivery of our Winter Heating Payment which, in contrast to the UK Governments Cold Weather Payment, guarantees a reliable annual payment to people on low-incomes, including those pensioners in receipt of Pension Credit each winter. We are calling on the UK Government to introduce a social tariff in the form of an automatic targeted bill discount to address unaffordable energy bills at source. Whilst powers remain reserved, the Minister for Climate Action secured the agreement of energy suppliers and organisations to participate in a working group aimed at co-designing such a scheme – the outputs of which were shared with the UK Government in March 2025.

Similarly, ending child poverty is our single greatest priority. We have 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 our winter heating benefits (Winter Heating Payment, Child Winter Heating Payment, and Pension Age Winter Heating Payment). The uprating of PAWHP may have an indirect impact on those children and young people who live in a household with an eligible pensioner, by ensuring the payment amount keeps pace with inflation.

Start date of proposal’s development: 27 November 2024

Start date of CRWIA process: 27 November 2024

2. With reference given to the requirements of the UNCRC (Incorporation) (Scotland) Act 2024, which aspects of the proposal are relevant to children’s rights?

PAWHP will only be paid to people over the state pension age, and we therefore do not anticipate that our policy will have a direct impact on children and young people up to the age of 18.

Although children or young people may be cared for by an individual in receipt of PAWHP, the purpose of this payment is to assist with the extra heating costs associated with older age, therefore we do not anticipate this payment to have a direct impact on children and young people. For some children and young people aged under 19, there is another form of heating assistance delivered by Social Security Scotland, known as Child Winter Heating Payment (CWHP) (previously known as Child Winter Heating Assistance), which helps to mitigate the additional heating costs that the households of the most severely disabled children and young people face in the winter months. Similarly, Winter Heating Payment (WHP) provides a reliable annual payment to support with heating costs for those in receipt of relevant low-income benefits, including families who have responsibility for either a child under the age of five or a disabled child.

Currently, eligibility to PAWHP is restricted to pensioners in receipt of relevant benefits. One of these benefits is Child Tax Credit (CTC), a measure with bearing on child poverty rates through its support of low income individuals with responsibility for a child. As such, previous analysis found that for the children who are part of a household in which an individual is entitled to PAWHP, either through receipt of CTC or other eligible benefits, the payment will have an indirect positive impact on their rights under Article 26 (right to benefit from social security) and Article 27 (right to an adequate standard of living).

However, with the closure of Tax Credits from 5 April 2025, CTC will no longer be a qualifying benefit for Winter Fuel Payment and PAWHP. As such, those who previously received PAWHP through receipt of CTC will no longer receive the higher rate of PAWHP unless they have transferred on to one of the other relevant qualifying benefits.

Through the introduction of universal eligibility to PAWHP, every pensioner household will be entitled to a payment of at least £100. This policy will ensure that every pensioner household will receive support. For children who are part of a household with pensioners who would not receive PAWHP under the restricted eligibility criteria, the introduction of universal eligibility will therefore have an indirect positive impact on their rights under Article 26 (right to benefit from social security) and Article 27 (right to an adequate standard of living).

3. Please provide a summary of the evidence gathered which will be used to inform your decision-making and the content of the proposal.

From:

• existing research/reports/policy expertise
• consultation/feedback from stakeholders
• HMRC Provisional Child Tax Credit Statistics 2022^[1]

4. Further to the evidence described at ‘3’ have you identified any 'gaps' in evidence which may prevent determination of impact? If yes, please provide an explanation of how they will be addressed.

The only available HMRC provisional statistics date from April 2022. These figures are grouped by age group at the UK level, but not by client type (such as those of state pension age). The only data available is therefore for those aged 60+. A proportion of this group will therefore not be of state pension age, and will therefore not be eligible for PAWHP. The data is therefore not available to provide exact figures on the number of clients who would have been in receipt of CTC and who would have been eligible for PAWHP in winter 2024/25 or who would now be entitled to the universal payment and have a child or young person living with them.

5. Analysis of Evidence.

CTC was previously one of the relevant benefits granting eligibility to PAWHP under the restricted eligibility criteria. However, from April 2025 CTC will be discontinued. Internal Scottish Government analysis estimates that, with the closure of CTC, the majority of those of pension age in receipt of CTC will migrate to other relevant benefits, and so will remain entitled to a higher rate payment of PAWHP. The number of individuals who will not migrate to another relevant benefit following the discontinuation of CTC is expected to be very low, however these individuals will still receive a PAWHP payment of £100 per household through the introduction of universal PAWHP eligibility.

Assuming that the percentage of people in Scotland who previously claimed CTC remains constant across all age groups, it is estimated that there are approximately 1,000 single individuals aged 60 or over in Scotland who receive CTC. For couples where the eldest partner is 60 or over, the estimate is around 2,000.

This suggests there were roughly 3,000 recipients of CTC in Scotland aged 60 or over. However, as noted in section 4, these figures relate to those aged 60 and over more broadly, rather than specifically to those of state pension age. There is no figure for the number of individuals entitled to PAWHP in receipt of CTC, however we would expect this figure to be lower.

As noted above, although the majority of the pension aged CTC recipients are expected to migrate to another relevant benefit and retain eligibility to a higher-rate PAWHP payment, the introduction of universal eligibility will ensure that households with a pensioner who had previously received CTC, and who has not transferred on to another relevant qualifying benefit, do not lose entitlement to PAWHP.

Although the numbers are expected to be low, for the children who are part of a household in which an individual is entitled to PAWHP, the introduction of universal eligibility will have an indirect positive impact on their rights under Article 26 (right to benefit from social security) and Article 27 (right to an adequate standard of living).

6. What changes (if any) have been made to the proposal as a result of this assessment?

The policy intent is to provide support to pensioner households, and therefore any impact of PAWHP on children’s rights and wellbeing is indirect. As such, no changes have been made as a result of this assessment.