Low Income Winter Heating Assistance (LIWHA): consultation

Section 4 – Outline of Policy: Cold Weather Payment Background

4.1 Background – Cold Weather Payment (CWP)

CWP is a payment of £25 made by the DWP to eligible clients each time a ‘cold spell’ is recorded or forecasted in their local area between 1st November and 31st March.

4.2 Temperature

A ‘cold spell’ occurs when the average temperature is recorded as, or is forecast to be, zero degrees (Celsius) or below for seven consecutive days. This measurement system does not account for other weather conditions, such as wind chill and rain. This means that in many remote areas (especially islands), the localised effects of wind and other weather conditions are not taken into consideration since recorded temperatures have not reached zero.

4.3 Local Area

To identify a ‘cold spell’, each postcode in Great Britain is mapped to one of 95 weather stations. This mapping is done jointly by the DWP and the Met Office. The Met Office takes account of topography, the extent of built-up areas and the distance from available weather stations. Each postcode district is assigned to a weather station with the most similar climate in terms of the average winter temperature between 1981 and 2010. This postcode to weather station mapping is agreed before the service is due to start each year. There are currently 27 weather stations used to capture temperatures in Scotland, an increase from the 18 stations in place when the benefit was first established in 1988. Certain postcodes span the border with England which results in a small number of Scottish households being linked to weather stations in England and vice versa.

4.4 Eligibility

In addition to temperature, eligibility for CWP is dependent on a client being in receipt of, and meeting one of the qualifying conditions of, an existing DWP benefit. The majority of payments are made to clients in receipt of Pension Credit with the remainder made to people receiving Income Support, income-based Jobseekers Allowance, income-related Employment and Support Allowance, Universal Credit and Support for Mortgage Interest. Additional qualifying criteria for some of the low income benefits also need to be satisfied in relation to disability premiums paid to the client or the presence of a disabled child or child under 5 years of age in their household.

The eligibility criteria for CWP are complex, but ultimately eligibility is dependent on a client meeting one of the qualifying conditions detailed in Table 1 when a ‘cold spell’ is triggered.

Table 1. Qualifying Benefits and Condition

Income Support (IS)

Entitled to a CWP if they receive a disability premium, a severe disability premium, any one of the pensioner premiums, a child disability premium within IS or Child Tax Credit (CTC) or they have a child under 5 years.

Income Based Jobseeker’s Allowance (JSA (IB))

Entitled to a CWP if they receive a disability premium, a severe disability premium, any one of the pensioner premiums, a child disability premium within JSA(IB) or CTC or they have child under 5 years

Income Related Employment Support Allowance (ESA (IR))

Entitled to a CWP if they are placed in the support group or the work-related activity group or receive a severe or enhanced disability premium, pensioner premium, or have a child who is disabled for whom they receive a disability premium within CTC or have a child under 5 years.

Pension Credit (PC)

Entitled to CWP

Support for Mortgage Interest loan (SMI)

Entitled to a CWP if they receive a disability premium, a pensioner premium, have a child who is disabled, receive CTC that includes a disability or severe disability element or have a child under the age of 5 living with them.

Universal Credit (UC)

Entitled to a CWP, if they receive, or have underlying entitlement to, the limited capability for work element

they receive or have underlying entitlement to, a limited capability for work element with a work related activity element, they receive a disabled child element or have a child who is disabled or under the age of 5.

NB:- In addition they must also not be employed or self-employed, except where there is a child who is disabled in the family.

4.5 Variability

While CWP is targeted on households that are likely to be in need of support to pay their fuel bills, payments are dependent on weather conditions so the total amount of money awarded to eligible clients can vary greatly each year. However, data shows that the highest number of cold spells take place in the north of Scotland and in the last three years 68% of cold spells in Great Britain occurred in Scotland.

Table 2. Cold Weather Payments in Scotland – Caseload and Expenditure

Cold Weather Payment Details	2014/15	2015/16	2016/17	2017/18	2018/19	2019/20	2020/21
Cold Spell Triggers	29	22	11	61	25	7	76
Total No. of Eligible CWP recipients	380,000	415,000	409,000	393,000	385,000	365,000	402,000
No. of whom in receipt of Pension Credit	205,000	183,000	173,000	158,000	148,000	139,000	133,000
Total no. of payments	268,000	136,000	31,000	818,000	385,000	7,000	854,000
No. of payments to those in receipt of Pension Credit	148,000	65,000	15,000	333,000	147,000	3,000	289,000
Total no. of individual CWP recipients	226,000	119,000	26,000	387,000	320,000	4,000	398,000
No. of individual CWP recipients in receipt of Pension Credit	121,000	56,000	13,000	155,000	148,000	1,000	129,000
Total expenditure	£7,285,000	£3,480,000	£745,000	£21,520,000	£10,230,000	£225,000	£21,350,000
Expenditure to those in receipt of Pension Credit	£3,695,000	£1,600,000	£400,000	£8,300,000	£3,675,000	£75,000	£7,225,000

4.6 Current and post pandemic CWP Caseload

In winter 2020/21 there were 402,000 eligible recipients in Scotland. This was an increase from 365,000 eligible recipients in 2019/20. The increase in eligible recipients is likely to be a result of the increase in Universal Credit (UC) recipients due to the COVID-19 pandemic.

For this reason we think it is reasonable to forecast the CWP caseload using the average caseload from those years for which data are available (2014/15 to 2020/21) without making an adjustment to account for the increase in UC cases. This gives a caseload of around 400,000. This means that a £50 flat payment could cost around £20m per year, £5m more than the estimated budget for CWP of around £15 million (based on average expenditure since 2008/09).

Table 3. predicted eligible recipients based on qualifying benefits

Qualifying benefits	Scotland caseload
Pension Credit	133,000
Universal Credit (UC) with a disabled child element, or UC and limited capability for work and not in employment	269,000
Income Support (IS) or Income-based Job Seeker’s Allowance (JSA (IB)) with disability or disabled child element
Income related Employment Support Allowance (ESA (IR)) with severe/enhanced disability premium or limited capability for work
Child Tax Credit which includes a disabled child element
In receipt of UC, IS, (JSA (IB)) or (ESA (IR)) and are responsible for a child under 5
Total (based on eligible recipients for CWP in Scotland in 2020/21)	402,000