Pension Age Winter Heating Payment (PAWHP): equality impact assessment

Background

7. 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.

8. 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).

9. 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.

10. 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.

11. 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.

12. 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.

13. 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.

14. The Fairer Scotland Action Plan, published in 2018, 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]

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

16. 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.

17. 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.

18. 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.

19. As noted above, given the limited timescales available to lay regulations to ensure that universal payments are paid to every pensioner household in winter 2025/26, it has not been possible to consult further on the proposed introduction of universal eligibility prior to laying these amendment regulations.

20. Within responses to the PAWHP consultation, 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.

21. Similarly, there was broad support for maintaining the 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. 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.^[12]

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

23. 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).

24. 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.

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. 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 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 £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. This approach recognises that there are many pensioners who are above the Pension Credit threshold who are also in need of support, as well as those who do not take up their pension credit entitlement.

26. The Scottish Government acknowledges that the proposed flat-rate payment may result in some recipients receiving less support than they did under the previous UK Government universal WFP, which was available until winter 2023. Given the scale of the pensioner population in Scotland and budgetary constraints, the proposed flat-rate payment allows the Scottish Government to extend support to all eligible pensioner households, including those previously excluded under the restricted PAWHP, without exceeding affordability limits. We have prioritised universal inclusion of all pensioner households over providing larger payments to a subset of the older pensioners. This reflects a choice to provide support across the full spectrum of older people, including those marginally above benefit thresholds.

27. The decision to apply a £100 flat-rate payment is grounded in the commitment to deliver a universal entitlement for all pensioner households within a fixed budget envelope and recognises that the cost of reinstating the previous tiered UK Government universal WFP structure at £200 or £300 would significantly exceed the available budget. It is not intended to fully meet winter heating costs but to act as a consistent, predictable contribution within a wider set of support provided by the Scottish Government. Whilst not replicating the tiered levels of the UK Government’s former universal WFP, this approach supports the greatest number of older people.

28. 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 re-instatement of a universal 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 by prioritising inclusion over payment differentiation.

29. This Equality Impact Assessment now considers the impact of introducing universal eligibility to PAWHP from winter 2025/2026 onwards.

The scope of the Equality Impact Assessment

30. The scope of this EQIA is to look at the impact of introducing universal eligibility to PAWHP, for those with protected characteristics.

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

• Scottish House Condition Survey: 2023 key findings^[13]
• Equality Evidence Finder^[14]
• Social Security Experience Panel findings^[15]
• Independent Age Pensioner Poverty in Scotland^[16]
• Age Scotland Taking the Temperature Report^[17]
• Scotland’s Census - 2022 Data^[18]
• Latest internal Scottish Government statistics and analysis