BEIS announces £100 alternative fuels payment and EBSS extension

The Department for Business, Energy and Industrial Strategy (BEIS) announced further detail on the Energy Price Guarantee for households on 21 September 2022, targeted at some rural households and people using off-gas grid fuel¹. From 1 October 2022, the £400 Energy Bills Support Scheme (EBSS) discount will now be available to the 1% of households who did not previously receive it¹.

All households connected to mains electricity will receive the £400 energy bill discount announced in May¹. The £100 payment is for households not covered by the Energy Price Guarantee¹.

The Scottish government's cost of living analytical report, published on 2 November 2022, sets out how the crisis falls on households. The Institute for Fiscal Studies indicates that lower income households spend almost three times as much of their budgets on gas and electricity as the highest-income tenth on average, 11% versus 4%¹. The IFS predicted in August that the poorest fifth will face an 18% inflation rate in October 2022, compared to 11% for the richest fifth¹.

The report also records that 30% of households in Scotland did not have enough savings to keep them above the poverty line for one month should they lose their income, rising to 50% for the 20% of households with the lowest incomes¹. It notes that the £20 per week increase in Universal Credit and Working Tax Credit, announced in March 2020 to "strengthen the safety net" during the pandemic, was withdrawn in October 2021, meaning a fall in income for over 400,000 households in Scotland¹. A recent welfare reform report estimated that reinstating the £20 uplift would cost £540 million in Scotland in 2023/24, equivalent to the total income lost in that year as a result of the uplift being withdrawn¹.

On benefit uprating, the report says UK benefits and state pensions were uprated in April 2022 using the annual rate of CPI to September 2021, which was 3.1%¹. This was significantly lower than the 7.0% recorded in March 2022, just before benefits were uprated, and inflation has risen since then to 10.1% in September¹. Scottish low income benefits were uprated by 6% in April 2022, compared with 3.1% for most reserved benefits¹.

Why it matters for households

The £400 Energy Bills Support Scheme discount applies from 1 October 2022 to all households connected to mains electricity, including the 1% who did not previously receive it¹. The separate £100 payment covers households not covered by the Energy Price Guarantee, described as some rural households and people using off-gas grid fuel¹. The Energy Price Guarantee sets the unit cost of gas and electricity for covered households; the energy price cap is the separate Ofgem mechanism it replaced for the period covered.

The report's evidence on who is most exposed is about the shape of household budgets rather than the support itself. Lower income households spend a larger share of their budgets on gas and electricity, and the IFS predicted a higher inflation rate for the poorest fifth than the richest fifth in October 2022¹. The report also records that many households entered the crisis with little financial resilience, and that the withdrawal of the £20 Universal Credit uplift in October 2021 reduced income for over 400,000 households in Scotland¹. Benefit uprating of 3.1% in April 2022 fell short of inflation at the time and since¹. Help with bills beyond these schemes is covered in the guide to the Warm Home Discount and other help with energy bills, and income-related support more broadly in the benefits section.

What happens next

The EBSS discount and the £100 payment take effect from 1 October 2022¹. The Scottish government report was published on 2 November 2022¹. No further dates for changes to these schemes are given in the report.