Pension Age Winter Heating Payment: Equality Impact Assessment

Background

8. In July 2016 the Scottish Government launched a public consultation to support the development of a framework that would become the Social Security (Scotland) Bill. Questions in relation to WFPs and Cold Weather Payments (CWP) were incorporated into this consultation.

9. We asked, ‘Do you have any comments about the Scottish Government’s proposals for Winter Fuel and Cold Weather Payments?’ 164 respondents answered this question (82 individuals and 82 organisations).

10. Overall, a large number of respondents felt that the WFP was necessary to help tackle fuel poverty and inequality, and they generally welcomed the approach. Some of the themes highlighted by respondents on winter heating benefits included:

• In general, respondents supported a broad continuation of the current eligibility criteria.
• Whether the delivery of the WFP could be improved, particularly for those with protected characteristics.

11. The Scottish Government introduced Child Winter Heating Payment (CWHP) in winter 2020, to help mitigate the additional heating costs that the households of the most severely disabled children and young people face in the winter months. The payment value for 2025/2026 is £255.80.

12. Winter Heating Payment (WHP) launched in February 2023, which replaced the UK Government’s CWP, 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. In 2025/26 the payment value is £59.75.

13. Ensuring financial security in older age was a key priority laid out in the Scottish Government’s paper ‘A Fairer Scotland for Older People: framework for action’, published in 2019.^[9] This framework affirmed that whilst remaining in paid employment for longer will clearly support this aspiration, for many older people, financial security depends on ongoing access to pension funds, both state and private, and a range of other financial benefits and measures. As such, tackling pensioner poverty in the shorter term will primarily be the result of action to tackle costs of living, and to maximise incomes from social security and benefits in kind.

14. A Fairer Scotland for Older People is undergoing a refresh. As part of the refresh of the framework we have held a number of roundtables throughout Scotland to hear from older people and older people's organisations. This work will help to inform the development of a refreshed framework for older people to create a vision of the kind of Scotland we want to see, where business, public sector and third sector organisations can work together with communities and civic Scotland to shape the national narrative on ageing.

15. The Fairer Scotland Action Plan, published in 2016, also set out the Scottish Government’s commitment to ensuring that, wherever possible, older people can enjoy a thriving 'third age'. The plan set out that this meant supporting people who want to keep on working, maximising incomes, and reducing costs where possible.^[10]

16. A Social Security Experience Panel survey undertaken in February 2020 showed that respondents noted that the Winter Fuel Payment was helpful to them.^[11]

17. Some people felt that the payment amount could be increased, and that the payment could have been advertised better. Some people also felt that payments could have been made earlier in the year, particularly those with off-grid supplies. Some believed that the information on the different types of winter heating benefits could be clearer.

18. Prior to the UK Government decision to restrict eligibility of WFP in July 2024, we had consulted on policy proposals for PAWHP as a universal payment, in line with our commitment to introduce PAWHP on a like-for-like basis. The purpose of the consultation and associated stakeholder engagement was to gather views on the proposed ‘like for like’ delivery, eligibility criteria, payment format, to collect additional evidence for those who will receive PAWHP in rural and off-gas grid communities, and to identify any unintended consequences of introducing this new payment.

19. We also invited members of our Social Security Experience Panels for their views on the key policy considerations for this new benefit alongside the public consultation.

20. As noted above, given the limited timescales available to lay regulations to ensure that payments are paid to every eligible pensioner household in winter 2025/26, it has not been possible to consult further, prior to laying the amended regulations.

21. Within responses to the PAWHP consultation^[12], there was broad agreement that the like-for-like introduction of the payment would be an effective way to provide financial support for older people, with 58% of individuals and 89% of organisations agreeing.

22. Similarly, there was broad support for maintaining a universal approach to eligibility for all who have reached state pension age, with 80% of all respondents in favour of this approach. However, some stakeholders disagreed, with five organisations calling for the benefit to be targeted more effectively at those in fuel poverty. Some also advocated for a form of means testing of PAWHP, as it was argued that not all older people need this financial support, with a suggestion that alternative or additional income-based eligibility criteria could be used to identify and target the payment.

23. Our Experience Panel returned similar responses. 83% of respondents agreed that the proposed format for PAWHP would be an effective way for the Scottish Government to provide financial support to older people; 69% agreed with eligibility remaining linked to those reaching state pension age, 21% disagreed. Younger respondents were more likely to disagree.^[13]

24. On 29 July 2024, the Chancellor of the Exchequer announced the UK Government’s decision to cut the WFP and restrict eligibility to only 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 estimated 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.

25. 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 included 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).

26. 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.

27. 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. Following the UK Government’s Autumn budget in October 2024, and confirmation of associated budget in Scotland, Scottish Ministers worked at pace to consider options for delivery of PAWHP in winter 2025/26, as well as mitigations available for winter 2024/25. Scottish Ministers considered the finance available, and concluded £100 payments 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. On 28 November 2024 the Scottish Government announced that it will bring forward regulations to introduce a universal PAWHP from winter 2025/26 onwards.

28. On 9 June 2025, the UK Government announced that they would reverse their earlier decision and will now bring forward legislation that, from winter 2025 onwards, that will expand WFP eligibility to pensioners with an individual income of £35,000 or less per year. The payment would be £200 per pensioner household with no individual aged 80 or over, or £300 per pensioner household with an individual aged 80 or over. This was expected to increase the amount of pensioners eligible to receive the WFP in England and Wales from 1.5 million to 9 million. The House of Commons Work and Pensions Committee welcomed the reversal, noting that the decision by the Government will ‘mean the payment gets to those who need it.’^[14]

29. In contrast the universal PAWHP for winter 2025-26 would have provided £203.40 to pensioners in receipt of relevant benefits below the age of 80, £305.10 for those in receipt of relevant benefits aged 80 and over, and £100 for pensioner households not in receipt of relevant benefits, with regulations laid before the Scottish Parliament on 6 June 2025 introducing this change. This would have been an estimated investment of £98 million in 2025/26 by the Scottish Government, compared to the £29 million investment for 2024/25 under the restricted approach.^[15]

30. As a result of the change in the UK Government policy the Scottish Fiscal Commission (SFC) predicts that the associated Block Grant Adjustment (BGA) funding the Scottish Government is expected to receive increases by around £120 million.^[16]

31. The UK Government decision was announced with no prior engagement with the Scottish Government, and Ministers and Officials within Scottish Government worked to understand the implications of the UK Government decision. Following careful consideration of the options available, the Scottish Government decided to mirror the revised UK Government approach for PAWHP, extending PAWHP eligibility to those pensioners earning £35,000 or less.

32. The payment values of PAWHP are £305.10 and £203.40 and would lead to pensioners in Scotland being better off compared to those in the rest of the UK. The Scottish Government has also started discussions with the UK Government to extend the proposed arrangements in England and Wales to recover payments from those pensioners with an individual income of more than £35,000 through the tax system. The intention that the payment would be recovered automatically, with pensioners not needing to register with HM Revenue & Customs (HMRC) or take any further action.

33. The key findings published from the Scottish House Condition Survey (SHCS) 2023 indicates that the median fuel poverty gap for 2023 was £1250, and therefore the revised PAWHP alone is not likely to have a significant impact on fuel poverty rates. However, it will provide a valuable contribution towards heating costs each winter to the broadest possible group of older people in need. Low income is seen as a key driver of fuel poverty and a barrier to people being able to heat their homes, with respondents to the most recent Scottish Governments fuel poverty periodic report noting that older households as a group identified as more likely to have a lower income.^[17]

34. In taking this decision, the Scottish Government have considered carefully the importance of prioritising the additional funding available to those who need it most. This approach will ensure that a higher level of support will be provided to those most in need, with over 720,000 Scottish pensioners estimated to benefit from the higher payment in the revised PAWHP who would have otherwise received a lower payment. SFC estimates indicate there will be a total investment of £151 million in 2025/26 for our revised Pension Age Winter Heating Payment, providing support to a total estimate of 860,000 pensioners.

35. This new approach does not restrict entitlement to only those in receipt of relevant benefits, ^[18] however the payment amount an individual is entitled to may vary depending on whether they receive a relevant benefit. An individual in receipt of a relevant benefit will receive the highest payment amount for their age group (either £203.40 for those under 80 or £305.10 for those aged 80 and over), with those in receipt of a relevant benefit as part of a joint claim, receiving one payment paid to the lead claimant. For those in receipt of a relevant benefit, their payment value is not impacted if they live with other pensioners who are not in receipt of a relevant benefit.

36. Older people are targeted because they may be particularly vulnerable to the effects of cold weather during the winter months^[19] and are more likely to be on fixed incomes. Evidence has shown that living in a cold home can have a negative impact on health, emotional wellbeing and resilience. Extending eligibility to PAWHP will not solely be a fuel poverty measure but will provide reassurance to older people on lower incomes to support them keep warm in the winter months when heating bills are higher, supporting their overall wellbeing. This financial support is particularly important given the significant increase in cost of living.

37. This Equality Impact Assessment now considers the impact of extending PAWHP eligibility to those of state pension age with an income of £35,000 or less from winter 2025/2026 onwards.

The scope of the Equality Impact Assessment

38. The scope of this EQIA is to look at the impact of extending PAWHP eligibility (to pensioners with an income of £35,000 or less) for those with protected characteristics.

39. A variety of information sources were used in compiling this EQIA, including:

• Scottish House Condition Survey: 2023 key findings^[20]
• Equality Evidence Finder^[21]
• Social Security Experience Panel findings^[22]
• Independent Age Pensioner Poverty in Scotland^[23]
• Age Scotland Taking the Temperature Report^[24]
• Scotland’s Census - 2022 Data^[25]
• Latest internal Scottish Government statistics and analysis