Fifty-Eighth Report - Energy bills support

Select Committee
Public Accounts Committee HC 1074 16 June 2023
Report Status Response document linked Recorded deadline: 16 Aug 2023

Missing links do not establish that no response was published. A linked document does not verify responses to individual findings.

Conclusions & Recommendations 28 items (3 recs)
Source View on Parliament website

No response data available yet.

Government response
Treasury minutes: Government response to the Committee of Public Accounts on the Fifty-eighth report from Session 2022-23 · published 24 Sep 2023
Read the government response ↗ Response on the tracker

Recommendations & Conclusions

28 results
2 Recommendation
Publish analysis of unredeemed energy vouchers and actions to increase household redemption rates.
Recommendation
The Department is still not doing enough to ensure that support reaches the two million consumers on prepayment meters. Those on prepayment meters are typically on more expensive energy tariffs due to the cost of the systems used to run … Read more
HM Treasury
View Details
3 Conclusion
Report on fraud and error rates in energy support schemes and plans for reduction.
Conclusion
The Department drew on lessons it had learnt from financial support it provided during the pandemic to reduce the risk of fraud and error of the schemes, but does not yet know how successful this has been. The Department estimates … Read more
HM Treasury
View Details
4 Conclusion
Provide analysis of policy impacts on businesses and prevent a financial cliff edge after March 2023.
Conclusion
HM Treasury and the Department do not fully understand the pressures the non-domestic sector will face when the EBRS ends in March 2023, or the potential risk of insolvencies. Many organisations are suffering financially from the aftermath of the pandemic … Read more
HM Treasury
View Details
5 Conclusion
Provide update on household energy affordability plans for winter 2023-24 and future scheme reforms.
Conclusion
The Department does not yet know how its plans for winter 2023–24, or once support ends in April 2024, will impact households, or how it will ensure the energy retail market provides a fair deal for consumers. At the time … Read more
HM Treasury
View Details
6 Recommendation
Set out timeline for REMA and plan to enhance electricity sector resilience against price shocks.
Recommendation
We are very concerned about the Department’s lack of urgency in addressing the energy market failures that are leading to high energy bills for consumers. During 2022–23, the UK experienced record-high wholesale gas prices. Since 2019, Ofgem has set a … Read more
HM Treasury
View Details
1 Conclusion
Committee took evidence on energy bills support from various stakeholders.
Conclusion
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Energy Security and Net Zero (The Department)2, the Former Permanent Secretary at the Department for Business, Energy and Industrial Strategy (BEIS), … Read more
HM Treasury
View Details
23 Conclusion
Ofgem energy price cap significantly increased due to rising wholesale energy costs.
Conclusion
Since 2019, the Office of Gas and Electricity Markets (Ofgem) has set a price cap on the price per unit of gas and electricity for customers on standard default tariffs, which apply to consumers who have not signed up for … Read more
HM Treasury
View Details
7 Conclusion
Off-grid homes and businesses experienced delays in receiving alternative fuel support.
Conclusion
Some off-grid homes and businesses had to wait longer to receive support compared to the schemes to support consumers connected to the energy grid. The Department started delivering payments through the non-domestic Alternative Fuel Payment Scheme in February 2023. On … Read more
HM Treasury
View Details
8 Conclusion
Delays in alternative fuel support disproportionately impacted Northern Ireland due to higher usage.
Conclusion
The delays to introducing support schemes for customers who use alternative fuels had a greater impact on consumers in Northern Ireland because of the higher percentage of consumers that use these fuels. More than two-thirds (68%) of households in Northern … Read more
HM Treasury
View Details
9 Conclusion
Delays experienced in providing energy bill support to off-grid and rural households.
Conclusion
We asked the Department what were the causes of other delays in getting support to customers. The Former Permanent Secretary told us that, in terms of operational challenges, the most difficult schemes were those where people were being asked to … Read more
HM Treasury
View Details
10 Conclusion
Complexity of universal energy support schemes delayed aid for vulnerable consumers.
Conclusion
The Department told us that an important lesson it had learnt from the schemes was the complexity in implementing a universal scheme to reach all energy consumers living under different circumstances. The Former Permanent Secretary explained that the Department did … Read more
HM Treasury
View Details
11 Recommendation
Ensure administrative barriers do not hinder timely energy support for prepayment meter customers.
Recommendation
Prepayment meter customers pay for their energy in advance by topping up a meter with a smart card, ‘key’ or cash token. Those on prepayment meters are typically on more expensive energy tariffs due to the cost of the systems … Read more
HM Treasury
View Details
12 Conclusion
Government and suppliers launched campaigns to increase prepayment meter voucher redemption rates.
Conclusion
In response to our report, in January 2023, the government told us that energy suppliers had sent vouchers to all two million customers who had a traditional prepayment meter. It explained that it was urging customers to redeem vouchers through … Read more
HM Treasury
View Details
13 Conclusion
Significant regional disparities observed in energy support voucher redemption rates.
Conclusion
We asked witnesses about the take-up rates for the vouchers. The Department told us that 76% of vouchers had so far been redeemed across Great Britain. It accepted that take- up was lower in metropolitan areas, and that the take-up … Read more
HM Treasury
View Details
14 Conclusion
Concerns persist over forced installation of prepayment meters by energy suppliers.
Conclusion
We asked witnesses about recent press coverage that had exposed the practice of some energy suppliers forcibly installing prepayment meters in people’s homes. Ofgem banned British Gas from forced installation of prepayment meters as of February 2023 and made a … Read more
HM Treasury
View Details
15 Conclusion
Rapid implementation of energy schemes created initial high fraud and error risks.
Conclusion
The Department had to design and implemented the schemes at speed to ensure they were in place for winter 2022–23. The Department took three weeks to implement the EPG and two months for the EBRS. At the start of the … Read more
HM Treasury
View Details
16 Conclusion
Department leveraged pandemic experience and PSFA collaboration to mitigate energy scheme fraud risks.
Conclusion
The Department drew on lessons learnt from its financial support schemes during the pandemic to reduce the risk of fraud and error in the schemes.37 The Former Permanent Secretary told us that the Department’s previous experience from support schemes led … Read more
HM Treasury
View Details
17 Conclusion
Universal energy schemes with no application process presented lower inherent fraud risks.
Conclusion
The Former Permanent Secretary told us that while the Department was “acutely conscious” of the fraud risks within the schemes, it thought that the design of the energy support schemes meant that the risks of fraud were much lower than … Read more
HM Treasury
View Details
18 Conclusion
Non-domestic energy support schemes face higher fraud risks due to market complexity.
Conclusion
The NAO found that the risk of error was greater for EBRS than for EPG because the non-domestic energy market is more complex, less regulated by government and has a wider range of consumers. For example, energy usage and intensity … Read more
HM Treasury
View Details
19 Conclusion
Department lacks estimates of overpayment rates for energy support schemes and evaluations.
Conclusion
We asked the Department whether it had an estimate of the rate of overpayment within the schemes. Both the Former Permanent Secretary and the Department told us that they did not have an overpayment figure, but that overall, the Department … Read more
HM Treasury
View Details
20 Conclusion
Inconsistent sector inclusion in energy support schemes raises questions about criteria and understanding.
Conclusion
In April 2023, the government will replace the Energy Bill Relief Scheme with the Energy Bill Discount Scheme. This will support businesses for 12 months from April 2023 by providing a discount on their energy bills if wholesale prices are … Read more
HM Treasury
View Details
21 Conclusion
Reduced energy support risks businesses closing and wider economic objectives for government.
Conclusion
The reduced support could risk the Department achieving its wider economic objectives for the EBRS, such as reducing the effect of inflation and protecting jobs.48 The Federation of Small Businesses (FSB) told us that if energy prices remained high and … Read more
HM Treasury
View Details
22 Conclusion
Government provides diverse financial support to businesses beyond energy specific schemes.
Conclusion
HM Treasury told us it was providing a range of support to businesses and the public sector through a number of measures, not just the energy support schemes. For example, it pointed to support provided through: covid support schemes; a … Read more
HM Treasury
View Details
24 Conclusion
Rising energy bills and EPG cap increase push more households into fuel poverty.
Conclusion
At the time of our evidence session, household bills were protected by the EPG cap at £2,500 until the end of March 2023, which will increase to £3,000 from April 2023 to March 2024.57 HM Treasury told the NAO that … Read more
HM Treasury
View Details
25 Conclusion
Government develops new energy market consumer protection as retail market struggles financially.
Conclusion
Following our evidence session government announced in its spring statement that it would maintain the EPG at £2,500 until the end of June 2023.63 The government has committed to consulting on amending the EPG as soon as is feasible after … Read more
HM Treasury
View Details
26 Conclusion
Marginal electricity pricing links high gas prices to consumer bills, incurring huge public costs.
Conclusion
The approach to pricing electricity in the UK – known as marginal pricing - means that high wholesale gas prices results in high energy bills for consumers. This is because all electricity generators in the market are paid a fixed … Read more
HM Treasury
View Details
27 Conclusion
Review of Electricity Market Arrangements lacks clear timeframe, risking future consumer energy costs.
Conclusion
We asked witnesses about the effectiveness of the marginal pricing system and whether what customers were being charged reflected the cost of producing the energy they used. The Department told us that it was looking into this issue through its … Read more
HM Treasury
View Details
28 Conclusion
Decoupling electricity and gas prices needs careful reform for long-term consumer benefits.
Conclusion
We asked about whether the vast majority of the additional cost of energy to UK customers was going into increased profits for the energy sector. Energy UK told us that in looking at decoupling electricity and gas, the government should … Read more
HM Treasury
View Details