Energy bills support scheme announced

The Energy Bills Support Scheme (EBSS) was announced in April 2022, according to the Economics Observatory¹. It is a fixed sum payment of £400 to all eligible households, paid over the winter months from October to March inclusive¹. For pensioners, the payment is in addition to the winter fuel payment¹.

The scheme came into effect in October 2022 and operates by keeping the Ofgem price cap fixed¹. It was one of two major policies responding to rising energy costs, alongside the energy price guarantee (EPG), which also took effect in October 2022¹. The EPG aimed to limit average household bills to a maximum of £2,500, or £2,100 when combined with the EBSS, rising to a maximum of £3,000 from April 2023¹. In Jeremy Hunt's November 2022 budget statement, the EPG was set to continue for 18 months after April 2023, but at a less generous rate¹.

The Scottish Government's 2026 report on child poverty describes the UK Government's energy bill support package as running from 2022 to 2024 and providing short-term protection against fuel insecurity². It says the cushioning protected households, including those in Scotland, from the worst impacts of rising energy prices². The same report records a temporary discount on electricity and gas prices for all households from October 2022 to March 2024².

The context was a rapid rise in prices. Most of the increase in energy prices came after the Russian invasion of Ukraine at the end of February 2022¹. By October 2022, gas prices were 193% above their December 2020 level and electricity 96% higher, with household energy prices up 132%¹. The Scottish Government report states that inflation peaked at 11.1%, the highest rate of the last four decades².

Separately, the UK Government introduced cost of living payments between 2022 and 2024, which were UK wide and also benefited families in Scotland². These included £650 in 2022 paid in two instalments and £900 in 2023 to 2024 paid in three instalments to households receiving means tested benefits including Universal Credit and pension credit². There were also £150 Disability Cost of Living Payments for recipients of certain non-means tested benefits including Personal Independence Payment and Attendance Allowance, and £300 Pensioner Cost of Living Payments paid in addition to the Winter Fuel Payment in 2022/23 and 2023/24².

The Scottish Government did not directly replicate the Household Support Fund, which provided discretionary payments in England, but used Barnett consequentials funding for a range of measures². These included a £150 Cost of Living Award for households in Council Tax bands A to D and those in receipt of Council Tax Reduction².

Why it matters for households

The EBSS was paid automatically to eligible households over the winter months, so the amount a household received did not depend on how much energy it used¹. Because it was a fixed sum rather than a discount tied to consumption, the Economics Observatory notes it counts as a transfer payment¹. The EPG worked differently, affecting the unit price households pay for energy, which meant the Office for National Statistics took it into account when calculating inflation¹.

The Scottish Government report says the cost of living payments supported recipients' ability to meet essential costs, particularly energy bills and food, with over 60% reporting positive impacts in these areas². It adds that the flat rate design meant the payments were not sufficiently targeted for households with higher costs, such as households with three or more children, and that groups more likely to experience limited impact included households with children, those with additional health related costs, and private renters². The report also highlights the short-lived nature of the payments and the lack of longer-term measures to support families².

The report notes that prices rose at a higher rate than benefits were uprated and higher than earnings, meaning household costs were increasing faster than average household incomes². It says that while inflation has since fallen, the cumulative effect of rising prices means households now face a much higher cost of living relative to household incomes².

What happens next

The Scottish Government report states that ongoing global instability means fuel affordability remains a significant risk to child poverty outcomes². It says additional devolved measures have been introduced in Scotland to further mitigate fuel insecurity, although their impact is not yet clear². The report does not set out further UK-wide energy bill support beyond the 2022 to 2024 package².