Questions 9, 10 and 17 – 20: Payment Value and Format
Sections 5.4, 5.5 and 5.6 asked questions on the proposed value of the payment and the format in which it is proposed to be paid.
Value of Payment
The consultation proposed that the value of LIWHA should be £50. A single annual payment of £50 is equivalent to the value of two CWPs, payable on two periods of seven consecutive days of sub-zero temperature. Many respondents indicated that they consider a payment of £50 to be insufficient given the current cost of living crisis and the anticipated further increases in energy prices. This was echoed in our Experience Panel survey where less than one quarter of respondents agreed a single annual payment of £50 would be suitable. Alternative amounts suggested tended to range between £75 and £100.
For the majority of people, a £50 payment will provide more support than they have received on average previously through the DWP benefit. We know that island communities are likely to benefit from this change as they have historically received very few CWPs despite temperatures feeling cold because of factors such as wind chill and driving rain. However, there are some areas where historically the communities have received more than 2 CWPs in some years and under our proposal these areas may receive less.
Assuming that approximately 400,000 people each year will be eligible to receive the new benefit, increasing its value to £100 would double the forecasted annual expenditure to around £40 million. Such an increase at this time would not be affordable. We do not, therefore, intend to increase the value of the LIWHA payment for the benefit delivery in winter 2022. However, we will keep this under review.
We do recognise that the costs associated with heating homes has increased significantly since the initial development of LIWHA policy. This policy aims to mitigate some of the challenges presented by the volatile winter energy costs for vulnerable households and also to help alleviate poverty and inequalities. The current record rise in global gas prices which has seen wholesale prices increasing fourfold in the last year, heightens the risk that despite this financial support, there will be an ongoing need to support those at risk of, or in, crisis.
Format of Payment
The consultation proposed that LIWHA payments should be provided as a single, annual direct payment to eligible recipients rather than in another form.
Respondents' views were mixed on our proposal for a single payment each year. Some stakeholders suggested that payments be split to ensure coverage of the whole winter period and increase the chance of a payment coinciding with a cold spell. Others suggested that additional payments could be targeted to areas that have historically seen more frequent cold weather events.
Making more than a single payment to eligible clients each winter would inevitably increase the complexity and cost of delivering the benefit. The impact on both complexity and cost would depend on how many payment cycles were to be introduced, but it is likely that making more than one payment to eligible clients each winter would add increased risk to the delivery of the benefit and increase agency staffing requirements. However, we retain in the underpinning legislation the ability to legislate for additional payments to be made should the need arise and the funding be made available.
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