Axing winter fuel payment is a disaster for millions – but here are four ways the government may cut bills instead --[Reported by Umva mag]

FOR years, the Winter Fuel Payment has helped the most vulnerable people to keep their homes warm and stave off the cold. 

But this year, chancellor Rachel Reeves has decided to axe the benefit for 10million pensioners in a bid to make savings to plug an apparent £20billion “black hole” in our finances.

The £300 payment was previously available to everyone over the state pension age (66).

It means pensioners who have contributed into the system throughout their lives now find themselves penalised by this £22billion “black hole.”

According to insurer Sun Life, of the 12.7million people claiming the State Pension, 20% of men and 33% of women rely solely on the benefit, worth up to £11,500 a year.

The cut will leave millions of those already struggling households up to £300 worse off this winter.

“It’s not a decision I wanted to make,” said the chancellor when the cut was announced.

But the Government pressed ahead with the change, despite warnings from charities and experts.

ALL CHANGE

The Winter Fuel Payment will now only go to retirees on Pension Credit or a handful of other means-tested benefits.

The move, widely condemned by charities and experts as “cruel”, is expected to plunge many households into a season of unprecedented hardship. 

Caroline Abrahams CBE, charity director of Age UK, described the move as “baffling”.

She said: “The reality is that driving through this policy as the government is doing will make millions of poor pensioners poorer still, and we are baffled as to why some Ministers are asserting that this is the right thing to do.”

To make matters worse, an estimated 850,000 households eligible for Pension Credit are not claiming it, so will miss out needlessly.

The Government’s own equality analysis projects that three quarters of these older people will not put in a claim this year, and so will go into this winter without the £300 payment, at the same time that energy prices are rising by 10%.

The average household energy bill is set to increase by £149 from October 1 when Ofgem‘s next price cap comes into force.

NEW SUPPORT ON THE WAY

However, in a bid to alleviate the burden on households this winter, ministers are gearing up to introduce new energy support measures, so I hear.

Last month, charities and energy companies convened for a roundtable discussion, chaired by consumer energy minister Miatta Fahnbulleh, to identify the necessary interventions.

A follow-up meeting scheduled for the end of this month is expected to finalise the Government’s position on additional energy bill support.

Ms Reeves is then expected to announce the details of this assistance when she delivers her Autumn Statement on October 30.

In recent weeks, I’ve spoken with various stakeholders in the sector who have revealed the options currently on the table.

Here is everything we know is being discussed, along with the likelihood of new measures coming into force…

EXTENDED WARM HOME DISCOUNT

The Government is actively considering extending and boosting the Warm Home Discount (WHD), according to sources from major energy suppliers involved in the discussions.

The scheme, funded by the Government, is designed to help low-income and vulnerable households with their winter energy bills.

Currently, eligible households receive a one-off discount of £150 on their electricity bill, usually applied between October and March.

Last year, 3.14million households, including 956,000 pensioners, received the rebate.

During a recent roundtable discussion, stakeholders argued that the current level of support is insufficient.

It’s understood that ministers are now actively considering a proposal to double the WHD from £150 to £300.

Energy UK which represents all energy suppliers has also reiterated its calls to extend the eligibility criteria for the scheme – something which is also being considered.

At the moment to qualify for the WHD, you need to claim either the guaranteed credit element of pension credit or any of the following means-tested benefits:

• Income support
• Income based jobseeker’s allowance
• Income related employment and support allowance
• Housing benefit
• Universal Credit
• Child tax credit
• Working tax credits
• The “savings credit” part of pension credit

Where someone claims a qualifying benefit (excluding guaranteed pension credit), the government will assess their energy costs based on the type, age and size of property.

This means that you may not be considered eligible for the WHD if you live in a more energy-efficient property for instance, even if you receive a qualifying benefit.

But, energy companies have suggested that eligibility should be based on a combination of fuel poverty and income metrics instead.

This approach could potentially make those with high levels of energy debt eligible, even if they do not claim any benefits.

I think this would be a good move.

However, it is understood that changes to the scheme’s eligibility criteria aren’t likely to be implemented in the short-term.

How to get free debt help

There are several groups which can help you with your problem debts for free.

• Citizens Advice – 0800 144 8848 (England) / 0800 702 2020 (Wales)
• StepChange – 0800138 1111
• National Debtline – 0808 808 4000
• Debt Advice Foundation – 0800 043 4050

You can also find information about Debt Management Plans (DMP) and Individual Voluntary Agreements (IVA) by visiting MoneyHelper.org.uk or Gov.UK.

Speak to one of these organisations – don’t be tempted to use a claims management firm.

They say they can write off lots of your debt in return for a large upfront fee.

But there are other options where you don’t need to pay.

REVAMPED PRIORITY SERVICES REGISTER

Ministers are also considering proposals to enhance data sharing within the energy sector, sources have told me.

Such a change would enable energy companies to upgrade a register specifically designed to assist their most vulnerable customers.

Currently, thousands of financially strained customers receive extra support through their energy supplier’s Priority Services Register (PSR).

The service caters to vulnerable households, including the elderly, the ill, and those on very low incomes.

Benefits include advance warnings of blackouts, free gas safety checks, and additional support for those struggling, such as grants and personalised repayment plans.

At the moment, customers must sign up for their supplier’s individual scheme. 

This means that each time they switch providers, they need to repeat the registration process, which can be lengthy because you’ll need to share evidence to support your vulnerabilities.

However, with improved data sharing, there are proposals to make the service sector-wide.

This would mean that customers could be enrolled in a national framework, which would automatically notify their new supplier of their vulnerabilities.

I think this would be a really positive change.

But again, these proposals are still being assessed and are more likely to be implemented over the medium-term.

INTRODUCTION OF A SOCIAL TARIFF

Ministers are also considering introducing a social tariff for energy bills, similar to the discounted packages available for mobile and broadband customers.

Campaign groups have been calling for a social tariff for several years.

The proposed measure is broadly agreed to take the form of a targeted energy deal for qualifying low-income consumers, which is typically below the price of the cheapest available tariff and targeted at those living in fuel poverty or on a low income.

Chris O’Shea, boss off Centrica, previously called social tariffs a “game changer”.

He said in a blog post last June: “We need to take the opportunity to implement a progressive social tariff so that those who most need additional support to pay their bills can receive it.

“We can’t have a system where the rich get as much support paying their energy bills as the poor – that is just plain crazy.

“The introduction of a social tariff should be a game changer for consumers who are struggling with energy costs, food bills, higher rent, and soaring mortgage rates.”

E.ON’s UK boss, Chris Norbury recently called for the introduction of a social tariff in May.

Although no final decisions have been made, I’ve been told that this support is a long-term ambition.

The only issue ministers face at the moment is whether energy companies would pass on the cost of funding these tariffs to other billpayers.

AWARENESS CAMPAIGN

In the meantime, I’m told the Government is planning to launch a national awareness campaign ahead of winter designed to help customers who need support paying energy bills.

The hope is that this will increase uptake of already existing schemes to help them, but it won’t involve any new support.

I think solely going with this option would be a cop out and the Government should do more to support households set to be left short this winter.

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