Regulations to introduce a means-tested Pension Age Winter Heating Payment in Scotland were laid in the Scottish Parliament on 25 September 2024. This is the Scottish equivalent to Winter Fuel Payment (WFP). This blog looks at how this change is being introduced and the number of pensioners affected.
Change of plan
The plan was to introduce a universal Pension Age Winter Heating Payment (PAWHP) this winter administered by Social Security Scotland. This would have provided a £200 annual payment to all pension age households, or £300 where someone in the household was aged 80 or over. The Scottish Government consulted, the Scottish Commission on Social Security (SCOSS) reported on draft regulations and £178 million in funding through the Block Grant Adjustment for Winter Fuel Payment was added to the 2024-25 Scottish Budget.
But in July 2024, the UK Government announced that the benefit would be means tested in England and Wales. The Scottish Government has estimated that this will reduce the funding for Scotland by £150 million. This is because, under the fiscal framework, the UK Government provides enough funding thought the Block Grant Adjustment (BGA) to follow UK policy.
The Scottish Government is therefore, reluctantly, following the UK Government and restricting eligibility to pensioners getting means-tested benefits – primarily Pension Credit.
John Swinney MSP, the First Minister, said the decision was:
“taken without any consultation with the Scottish Government, […] we are left with no choice but to follow the UK Government’s decision. [..] I do not underestimate the scale of the difficulty. If there was an alternative, I would have liked to have taken it” Official Report, 5 September 2024, col 18-19.
The Cabinet Secretary for Social Justice, Shirley-Anne Somerville MSP, wrote in similar vein to the Secretary of State for Work and Pensions, Liz Kendall MP, on 20 September 2024 saying:
“given the significant impact of this decision and the wider cuts being imposed by the Chancellor of the Exchequer on our budgets, we have had no choice but to mirror this approach in Pension Age Winter Heating Payment.”
The Scottish Fiscal Commission forecast that spending based on the revised policy will be £32 million this winter.
The reduction in funding may not be applied immediately. The Scottish Fiscal Commission explain:
“As the UK Government policy change was announced after the 2024-25 Scottish Budget was set, the Scottish Government could defer the in-year adjustment to account for the reduction to the BGA until the final BGA can be calculated with outturn spending data and a reconciliation applied to a future Scottish Budget.”
Scottish regulations and parliamentary scrutiny
The Winter Heating Assistance (Pension Age) (Scotland) Regulations 2024 make the change in eligibility. They will be discussed in the Social Justice and Social Security Committee before being voted on in the Chamber.
Without these regulations, there is no legal basis for any Winter Fuel Payments at all. The Westminster regulations abolished the existing scheme across the UK, but only put in place a replacement for England and Wales.
In the longer term, it’s expected that the benefit will be delivered by Social Security Scotland. However, for this winter, there will be an agency agreement for the Department of Work and Pensions (DWP) to deliver the payment on behalf of the Scottish Government.
The timing is tight as the DWP needs to start making payments at the end of November. This means that the normal scrutiny by the Scottish Commission on Social Security will not happen. Instead the letter to SCOSS asks them:
“to carry out a period of scrutiny as you see fit. I have asked my officials to work closely with the Commission on any recommendations you wish to submit after the regulations have been laid.”
The impact assessments were updated to reflect the revised eligibility. The Equality Impact Assessment recognises that:
“The Scottish Government acknowledges that other people of pensionable
age may also face financial difficulties and would benefit from this support.”
However, it states that UK Government decisions meant a universal benefit was not possible. Rather than compare a universal with a targeted policy, the impact assessments compare with UK Government policy. The Fairer Scotland Duty Assessment therefore finds a neutral impact:
“PAWHP will provide older people on relevant benefits with the same level of support as is currently available, as the payment will mirror the current WFP eligibility criteria. This Fairer Scotland Duty has identified that overall, on that basis, the introduction of PAWHP to replace WFP is likely to have a neutral impact on reducing inequality and tackling poverty for older people by continuing to mitigate some of the winter heating costs experienced by older people on low incomes”
Debate in other parliaments
The House of Lords Secondary Legislation Scrutiny Committee was:
“unconvinced by the reasons given for the urgency attached to laying these Regulations and are particularly concerned that this both precludes appropriate scrutiny and creates issues with the practicalities of bringing in the change at short notice.”
The Chancellor of the Exchequer, Rachel Reeves MP, said it was a: “tough choice”, and not one she “wanted to make.”
Motions to annul the regulations were defeated on 10 September 2024 by 348 votes to 228 and also in the Lords on 12 September 2024 by 138 votes to 30.
For more discussion on the debate in England and Wales, see this House of Commons Library paper
In Wales, a motion calling on the UK Government to reverse its decision on Winter Fuel Payments was defeated on 19 September 2024 by 24 votes to 23.
In Northern Ireland, the Executive has followed the UK Government policy, despite “deep concerns” about the detrimental impact it will have. They are considering ‘one-off hardship payments’ to those in receipt of state pension.
How many pensioners will be affected?
You can use the table below to look up an estimate of the number of people in each Scottish Parliament constituency who will lose Winter Fuel Payment this winter. It shows the difference between the total pension age population from the 2022 census and the number of individuals getting Pension Credit in February 2024.
Pensioner poverty
Around 15% of pensioners – around 150,000 people, were in poverty in Scotland in 2022-23. For comparison, child poverty is around 24% and working age poverty is 21%. SPICe analysis using UK-MOD suggests that, at current take-up rates, means-testing WFP could increase pensioner poverty by 0.5 percentage points.
Pension Credit income thresholds
The basic income thresholds this year (2024-25) for Pension Credit guarantee element are:
- £218.15 per week for a single person (£11,344 per year)
- £332.95 per week for a couple (£17,313 per year).
It is possible to get higher Pension Credit if you are a carer, if you are disabled, have dependent children or certain kinds of housing costs. Those who reached pension age before April 2016 can also get an additional ‘savings credit’ if their income is above these thresholds.
Pension Credit take-up
21 December 2024 is the last possible date to make a successful backdated claim for Pension Credit in order to receive Pension Age Winter Heating Payment this year.
Estimated Penson Credit take-up is 63%. The UK Government therefore launched a take-up campaign including writing to all local authorities to encourage them to identify possible claimants. In the five weeks to end of August 2024, Pension Credit applications increased by 115%.
The Scottish Fiscal Commission forecast that take-up will increase by five percentage points by 2029 with half of this occurring in 2024-25. However, this projected addition to the caseload will be partly offset in future years by the increasing pension age.
In 2020, the UK and Scottish Governments agreed that the fiscal framework does not prevent the Scottish Government from running a take-up campaign on reserved benefits. In a recent answer to a parliamentary question (PQ), the Scottish Government said that:
“We have also offered to work with the DWP to improve take-up rates. This will include working with stakeholders across Scotland to increase awareness of Pension Credit and the link to eligibility for Pension Age Winter Heating Payment.”
Other help this winter
There is additional help for those getting Pension Credit. For example:
- £58.75 annual Winter Heating Payment for those on Pension Credit and certain other low-income groups.
- £150 Warm Homes Discount is automatically available to those on Pension Credit. Some other low-income groups are eligible to apply.
Other assistance, that doesn’t require a person to be getting Pension Credit includes Scottish Welfare Fund crisis grants which are available to those on a low income to meet essential short-term need, including food and heating.
In 2023-24, there was a £30 million Fuel Insecurity Fund, but this is not available in 2024-25.
In England, the Household Support Fund has been extended to March 2025, providing £79 million to devolved administrations. This fund does not exist in Scotland.
In its letter to SCOSS, and in the Fairer Scotland Duty assessment the Scottish Government also highlighted the Council Tax Reduction Scheme, free bus travel for over 60s, support for older peoples’ organisations, energy efficiency schemes and plans to develop a social tariff with energy suppliers.
Improving targeting?
Some commentators, such as Martin Lewis, agree with targeting the Winter Fuel Payment but disagree with restricting it to Pension Credit. In the Scottish Government’s consultation on Pension Age Winter Heating Payment, both the Poverty and Inequality Commission and the Scottish Fuel Poverty Advisory Panel disagreed with a universal payment.
Suggestions for alternatives have included:
- keeping it universal but making it taxable
- linking it to council tax band D properties
- paying only to those age 80+
In future, the expectation is that Social Security Scotland will deliver the payment. In its letter to SCOSS, the Scottish Government stated that:
“Work is currently ongoing to consider the longer-term development of the benefit post-launch.”
UPDATE: Govan Law Centre are supporting a couple to seek permission from the Court of Session to lodge a judicial review of the regulations. For background on the Judicial Review process see this SPICe briefing: Judicial Review | Scottish Parliament
Camilla Kidner, SPICe research.