Pension Age Winter Heating Payment: Fairer Scotland Duty Assessment

Summary of evidence

This Fairer Scotland Duty Impact Assessment has been developed drawing on a range of primary research, including the 2016 public consultation on the content of the Social Security (Scotland) Act 2018,^[5] the consultation on Winter Heating Payment (WHP, previously ‘Low Income Winter Heating Assistance’),^[6] the consultation on PAWHP,^[7] desk research and engagement with those with lived experience of benefits.

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.^[8]

WFP and Cold Weather Payment (CWP) were incorporated into this consultation. 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).

Overall, many respondents felt that WFP and CWP were 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 WFP could be improved, particularly for households in rural and island communities that are not on the gas grid.

In 2020, we launched Child Winter Heating Payment (CWHP) to help mitigate the additional heating costs that the households of the most severely disabled children and young people face in the winter months.

In February 2023 we launched WHP, replacing CWP in Scotland 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.

A Social Security Experience Panel survey undertaken in February 2020 showed that respondents noted that the payment was helpful to them.^[9]

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 believe that the information on the different types of winter heating benefits could be clearer.

Prior to the UK Government decision to restrict the eligibility of WFP in July 2024, we consulted on our proposal to introduce PAWHP as a universal payment, in line with our commitment to deliver PAWHP on a like-for-like basis when replacing WFP as it had been delivered prior to winter 2024/25. The purpose of the consultation and associated stakeholder engagement was to gather views on the proposed like-for-like delivery, considering eligibility criteria, payment format, to collect additional evidence for those who would receive PAWHP and who are off-gas grid and to identify any unintended consequences of introducing the new payment, including the impact of the new benefit on businesses and key stakeholders.^[10]

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.

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

Although 80% of respondents expressed support for universal eligibility, some stakeholders disagreed, with five organisations calling for the benefit to be targeted more effectively at those in fuel poverty. This was on the basis that any savings could provide additional funding to support other fuel poverty initiatives. 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.

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.^[11]

Link between poverty and older age

The 2023 Scottish Housing Condition Survey (SHCS)^[12] found that older households (37%) have similar rates of fuel poverty to families (34%) and have higher rates than other households (32%). When considering extreme fuel poverty, the fuel poverty rate for older households was 25% compared to families (12%) and other households (19%).

Older people are also more likely to live in less energy efficient homes. The recent SHCS shows that older households (66.1) have lower average Energy Efficiency Rating than families (69.3) and other (adults without children) households (68.3). Poor energy efficiency is a key driver of fuel poverty.

Between September and November 2022, Independent Age commissioned research to explore the experience of living in poverty for older people in Scotland.^[13] 53% of participants revealed their current income negatively impacts their quality of life.

Pensioner poverty is a growing issue in Scotland, with one in seven people over state pension age living in poverty.^[14] By mid-2042, the proportion of the population that are of pensionable age is projected to increase to 22.8%.^[15] In Scotland, the number of people of pension age is expected to increase by 21% by mid-2024.^[16]

The impact of fuel poverty on households who require an enhanced heating regime

Living in a cold home can be detrimental to many older people. There is a strong relationship between cold homes and cardiovascular and respiratory disease.^[17] The links between long term health conditions, poor health, wellbeing, and living in a cold, damp home is well recognised. A recent inquiry into pensioner poverty by the House of Commons Work and Pensions Committee also highlighted the health impact of fuel poverty on older people, noting older people reluctant to go into debt taking pre-emptive action which may include considerable rationing of their energy use. Further the inquiry highlighted the link between cold and respiratory and heart disease and as a factor that can worsen conditions such as arthritis.^[18]

With reduced muscle mass and poorer circulation, older people are not as physiologically able to keep warm during cold periods. This can affect their immune systems, amplifying pre-existing conditions and have an effect on their mental health.^[19] Older people are also more likely to spend more time at home according to a recent survey carried out by Age UK.^[20]

In addition, there is also evidence of the mental health and wellbeing impacts of living in cold homes and experiencing fuel poverty, and the benefits to mental wellbeing which can be delivered from tackling fuel poverty across the age range.^[21]

The Scottish Government estimates that 15% of pensioners (150,000) over state pension age were living in relative poverty after housing costs in Scotland between 2020 and 2023.^[22]

The likelihood of being disabled/experiencing chronic and complex health conditions among those 65 and over increases with age.^[23]

Also, fuel poor households with low levels of energy efficiency, living in homes below EPC band C, are more likely to have at least one member who has a long-term illness or disability (56%) when compared to non-fuel poor households in similarly inefficient homes (41%).^[24]

As set out in section 3 of the Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act, a household is in fuel poverty if, in order to maintain a satisfactory heating regime, total fuel costs necessary for the home are more than 10% of the household’s adjusted net income (after housing costs), and if after deducting fuel costs, benefits received for a care need or disability and childcare costs, the household’s remaining adjusted net income is insufficient to maintain an acceptable standard of living. The remaining adjusted net income must be at least 90% of the UK Minimum Income Standard (MIS) to be considered an acceptable standard of living, with an additional amount added for households in remote rural, remote small town and island (RRRSTI) areas.

• Extreme fuel poverty follows the same definition except that a household would have to spend more than 20% of its adjusted net income (after housing costs) on total fuel costs to maintain a satisfactory heating regime.

The World Health Organisation (WHO) have defined an acceptable heating regime as 21ºC in the living room and 18ºC in other rooms, for 16 hours in every 24, unless the household is classified as “vulnerable”, such as when at least one resident has a long-term sickness or disability. In these instances for which enhanced heating temperatures are required, the heating regime is 23ºC in the living room and 18ºC in other rooms, for 16 hours per day.

Considering this guidance, the Scottish Fuel Poverty Definition Review Panel recommended in 2017 that for ‘vulnerable households’, including those of disabled people, the living room temperature recommendation should be 23ºC and other rooms 20ºC.

This was updated in the Fuel Poverty (Enhanced Heating) (Scotland) Regulations 2020, which specifies the households for which enhanced heating temperatures and/or hours are appropriate.

• Enhanced heating temperatures are 23°C in the living room and 20°C in other rooms.
• Standard heating temperatures are 21°C in the living room and 18°C in other rooms.
• Enhanced heating hours are 16 hours a day during the week and at the weekend.
• Standard heating hours are 9 hours a day during the week and 16 hours a day during the weekend.
• A satisfactory heating regime is defined as follows.
• Enhanced heating temperatures and enhanced heating hours (enhanced heating regime 1) are appropriate for households where the dwelling is frequently occupied during the morning or afternoon or both on weekdays by any member of the household when it is cold and any member of the household meets one or more of the following criteria: is aged 75 or over; has a long-term sickness or disability; or is in receipt of benefits received for a care need or disability.
• Enhanced heating temperatures and standard heating hours (enhanced heating regime 2) are appropriate for households where the dwelling is not frequently occupied during the morning or afternoon or both on weekdays by any member of the household when it is cold and any member of the household meets one or more of the following criteria: is aged 75 or over; has a long-term sickness or disability; or is in receipt of benefits received for a care need or disability.
• Standard heating temperatures and enhanced heating hours (enhanced heating regime 3) are appropriate for households where the dwelling is frequently occupied during the morning or afternoon or both on weekdays by any member of the household when it is cold and any member of a household has a child aged 5 years old or under and the household is not a household for which enhanced heating regimes 1 or 2 are appropriate.

For all other households, standard heating temperatures and standard heating hours (the standard heating regime) apply.

In spite of the WHO recommendations, research shows that vulnerable households often struggle to afford adequate energy consumption to meet their needs.