Cost-of-Living Payments and Energy Bills Rebate

In response to the 2021-23 cost-of-living crisis the UK government announced two distinct one-off support packages. Both are modelled in PolicyEngine UK under gov.treasury.* and count in household net income and in gov_spending. Both also count in HBAI household net income, the income behind the poverty statistics, though under different HBAI headings (see below).

Energy Bills Rebate (winter 2022)¶

Announced by the Chancellor in February 2022 to help households with the spike in domestic energy prices. Two strands:

• £150 Council Tax Rebate for households in Council Tax bands A–D in England, a one-off in 2022-23. Households qualified on their band on 1 April 2022. The guidance asked billing authorities to pay from April and set 30 September 2022 as the deadline for the payments the government would reconcile (paragraph 7). Scottish councils paid the Cost of Living Award and Welsh councils the Cost of Living Support Scheme, £150 each, to bands A–D and to Council Tax Reduction recipients in any band. Scottish councils tested receipt on 14 February 2022 and Welsh councils on 15 February 2022. The model reads council_tax_reduction for the whole year. Councils in all three nations also paid band E homes they charged at band D under the disabled band reduction. The model has no input for that reduction. In Scotland and Wales it pays those homes only when they also receive Council Tax Reduction; in England it never pays them. The model doesn’t simulate Scotland’s separate Council Tax Reduction for bands E to H (regulation 14A; SSI 2016/253), so a Scottish household on that alone misses the payment. Northern Ireland levies domestic rates, not council tax, and had no Council Tax Rebate, so the model pays none there whatever the household’s council tax band (the enhanced FRS gives every Northern Ireland household band A, the default policyengine-uk-data assigns when the FRS records no band).

• Energy Bills Support Scheme, a £400 discount on domestic electricity bills in Great Britain, paid in six monthly instalments from October 2022 to March 2023 (£66 for two months, then £67). Announced in February 2022 as a repayable £200, it became a £400 grant in the May 2022 support package. Northern Ireland paid £600 in one go from January 2023: £400 of support and a £200 Alternative Fuel Payment, to each domestic electricity customer on 2 January 2023, whatever fuel the household heats with (EBSS AFP NI Direction, 23 December 2022, paragraph 3 and footnote 1). The model leaves out Great Britain’s £200 Alternative Fuel Payment, which suppliers paid on electricity meters the government listed in areas off the gas grid.

PolicyEngine models these via:

• energy_bills_rebate (Household, YEAR) = ebr_council_tax_rebate + ebr_energy_bills_credit + ebr_alternative_fuel_payment

• Parameters at parameters/gov/treasury/energy_bills_rebate/:

  • energy_bills_credit_monthly.yaml — the Great Britain monthly instalments

  • energy_bills_credit_northern_ireland.yaml — the Northern Ireland £400 in January 2023

  • alternative_fuel_payment_northern_ireland.yaml — the Northern Ireland £200 Alternative Fuel Payment, paid with the £400

  • energy_bills_credit.yaml — a yearly top-up, zero by default, kept for reforms

  • council_tax_rebate/bands.yaml — qualifying CT bands (A–D)

  • council_tax_rebate/council_tax_reduction_countries.yaml — countries whose councils also paid Council Tax Reduction recipients in any band (Scotland and Wales)

  • council_tax_rebate/amount.yaml — £150 in 2022-23 and nothing in any other year

ebr_energy_bills_credit sums the monthly instalments within each calendar year, so a Great Britain household on the scheme throughout gets £199 in 2022 and £201 in 2023, while HBAI counts the whole £400 in 2022-23. Each month takes the scheme of the household’s country in that calendar year. A situation that sets Northern Ireland for 2022 only therefore gets the Great Britain credit from January to March 2023, and no Alternative Fuel Payment, because country is not carried forward and defaults to England.

HBAI classifies both strands as miscellaneous income, not state support, and DWP imputes receipt because the FRS did not ask about them. So energy_bills_rebate is in hbai_household_net_income but not in hbai_benefits. No FRS income field behind miscellaneous_income holds the rebates, so the model counts them once.

HBAI income takes the same calendar-year sum as household net income and government spending. A Great Britain household in bands A to D on the scheme throughout gets £349 in 2022 and £201 in 2023, where HBAI counts £550 in 2022-23. A Northern Ireland household gets nothing in 2022 and £600 in 2023, though its main rollout began on 16 January 2023, in 2022-23. The direction set 31 March 2023 as the normal deadline for providing it, and let suppliers reissue vouchers and cheques that customers could redeem until 30 June 2023 (paragraph 12(b)). Summing the credit by financial year would move all three measures together. epg_subsidy sums the Energy Price Guarantee by calendar year in the same way; it counts in household net income and government spending but not in HBAI income. The model keeps one timing for both schemes for now.

Great Britain’s Alternative Fuel Payment¶

Electricity suppliers in Great Britain paid £200 to 1,842,760 customers, £368.6 million in all (DESNZ supplier data), and local authorities paid 89,750 more through the Alternative Fund (DESNZ applications data). The model leaves out both, so it understates 2023 income and government spending by about £387 million. The omission affects 2023 alone.

Suppliers paid whoever held the account, at the start of 1 February 2023, for each electricity meter the Secretary of State named (direction, paragraph 6). The department built that list from postcodes not connected to the gas grid and removed areas with high use of electric heating (interim evaluation, page 54).

Spending on liquid and solid fuels does not pick out the households on that list. In the Living Costs and Food Survey, about a third of Great Britain households buying these fuels have gas central heating, and more than a third of households with oil, solid fuel, calor gas or other gas central heating report no purchase. The enhanced FRS 2023-24 carries neither liquid_fuel_consumption nor solid_fuel_consumption. PolicyEngine’s Microcosm dataset carries both from 2024, and its 842,000 Great Britain households with spending on either fall 54% short of DESNZ’s count. None of the model’s datasets with a 2023 year records a household’s heating fuel or gas connection.

Household Energy Payment (2026-27)¶

Budget 2026 (paragraph 6.24) announced a one-off £100 Household Energy Payment for households in council tax bands A to D in England, which local authorities pay into bank accounts from January 2027. PolicyEngine models it as household_energy_payment (Household, YEAR), with parameters at parameters/gov/treasury/household_energy_payment/:

• amount.yaml: £100 in model year 2026 (6 April 2026 to 5 April 2027), zero otherwise

• bands.yaml: qualifying bands (A to D)

• countries.yaml: qualifying countries (England)

It counts in household_benefits and gov_spending, as the Energy Bills Rebate does, and in hbai_household_net_income: HBAI counted the 2022 Council Tax Rebate and the Energy Bills Support Scheme as miscellaneous income (HBAI quality and methodology report FYE 2023). The devolved governments receive a Barnett share instead, which the model does not allocate, and the model leaves out the £100 million of further local-authority funding for targeted support.

The payment goes to the householder liable for council tax on their main home, including most households exempt from council tax; full criteria are to follow. The model pays every household in a qualifying band. Survey data hold only main homes, so the second homes and empty properties the scheme excludes do not arise. The model can’t tell which households have a landlord liable for council tax (council tax in the rent), so it pays them, which slightly overstates recipients. council_tax_band defaults to band D, so a household whose survey record has no band qualifies.

Cost-of-Living Payments (2022-23 and 2023-24)¶

The model pays two successive packages through the household variable cost_of_living_support_payment, with parameters at gov/treasury/cost_of_living_support/. The variable returns the sum of three strands: the means-tested payment to each benefit unit, the disability payment to each person and the pensioner payment to the household.

From 2024-01-01 the amounts read zero, so the one-off payments don’t extrapolate forward. The amounts also read zero before 2022, so although the model carries each parameter’s earliest value back to 2015, it pays nothing in 2015-16 to 2021-22.

How PolicyEngine computes the payment¶

Under the Social Security (Additional Payments) Acts 2022 and 2023, the Secretary of State and HMRC pay the means-tested payment to each “person”, meaning an individual or a couple (section 1(6) of the 2022 Act, section 1(9) of the 2023 Act), and the Secretary of State pays the disability payment to each individual (section 5(1)). Three variables model these payments:

• cost_of_living_means_tested_payment (benefit unit) pays means_tested_households.amount to a benefit unit with any of means_tested_households.qualifying_benefits (section 1(1) and (3)), or with none of them and a yearly award of either credit in means_tested_households.qualifying_tax_credits that reaches means_tested_households.minimum_tax_credit_award (section 1(2)). Parliament set that minimum at £26 for 2022-23 (section 2(2) of the 2022 Act) and set none for 2023-24 (section 3(1) of the 2023 Act). A unit with both a benefit and a tax credit gets one payment.

• cost_of_living_disability_payment (person) pays disabled.amount to a person with any of disabled.qualifying_benefits.

• cost_of_living_support_payment (household) adds both over the household’s benefit units and members, and adds pensioners.amount once if the household has any of pensioners.qualifying_benefits (the Winter Fuel Payment).

So a household with a pensioner couple on Pension Credit and an adult son on Universal Credit gets two means-tested payments, and a couple both on PIP gets two disability payments. The strands stack: a pensioner on Pension Credit and Attendance Allowance with a Winter Fuel Payment collects all three.

The model holds yearly amounts, so it tests receipt of each benefit and tax credit over the year rather than in the month ending with each qualifying day, and compares each tax credit’s yearly award with the £26 minimum. It has no variables for the other disability benefits that Parliament listed in section 5(2) (constant attendance allowance, Adult Disability Payment, Child Disability Payment and the mobility supplement), so it pays no disability payment to someone who gets only those.

References¶

• HMT/DWP, May 2022 cost-of-living support package announcement

• DWP, Cost-of-Living Payments 2023-24 guidance (means-tested, pensioner and disability strands).

• HMT, Energy Bills Support Scheme and Council Tax Energy Rebate.

• Scottish Government, Local Government Finance Circular 2/2022 (Cost of Living Award).

• Welsh Government, Cost of Living Support Scheme guide for local authorities.

• The Council Tax Reduction (Scotland) Amendment (No. 2) Regulations 2016 (Council Tax Reduction for bands E to H).

• DWP, HBAI quality and methodology information report, FYE 2023 (treatment of the cost-of-living support schemes in HBAI income).

• House of Commons Library briefing CBP-9501 — Cost of Living Payments and the energy crisis.

• Social Security (Additional Payments) Act 2022, sections 1 to 5 (the 2022-23 means-tested and disability payments).

• Social Security (Additional Payments) Act 2023, sections 1 to 5 (the 2023-24 means-tested and disability payments).