Transparency data

Energy Bills Support Scheme Alternative Funding: Accounting officer assessment summary 2022 (HTML)

Updated 12 June 2023

Department for which the accounting officer who made the assessment is responsible: Department for Business, Energy and Industrial Strategy

Project title:

Energy Bills Support Scheme Alternative Funding (part of the wider Energy Bills Support Scheme Programme)

Main scheme project stage:

Full EBSS Alternative Funding Business Case approved by Treasury Approvals Point 21 November 2022. Scheme launch date: 27 February 2023.

It is normal practice for Accounting Officers to scrutinise significant policy proposals or plans to start or vary major projects, and then assess whether they measure up to the standards set out in Managing Public Money. From April 2017, the government has committed to make a summary of the key points from these assessments available to Parliament when an Accounting Officer has agreed an assessment of projects within the government’s Major Projects Portfolio.

The assessment detailed below was approved on 22 December 2022.

Background and strategic context

The UK is currently experiencing an unprecedented rise in household energy bills, driven by rising global energy prices. This is placing pressure on household budgets and these constraints are expected to lead to potentially harmful underconsumption of energy and other essential goods and services during the winter – survey data which predates the most recent price announcement is already indicating this trend, which is only expected to worsen as the increase in costs bite further.

The purpose of EBSS AF is to reduce the impact of high energy bills on households that do not have a domestic electricity supplier and are therefore unable to receive support through either EBSS GB or EBSS AFP in winter 2022/23. Eligible households can apply to receive a single payment of £400 through the EBSS AF and for those in Northern Ireland, this will be topped up to £600 to include the £200 Alternative Fuel Payment (AFP) in recognition of the high prevalence of alternative fuel usage, particularly heating oil, in Northern Ireland.

In Great Britain, local authorities will be responsible for processing applications and issuing payments to eligible households. In Northern Ireland, a contractor has been appointed to process applications and payments to eligible households will be issued by UKSBS, a subsidiary organisation of the government.

Assessment of EBSS AF against the Accounting Officer standards

Regularity

In GB, the department relies on section 13(1) of the Energy Prices Act 2022 as the spending power to provide the £362.4 million grant via Local Authorities to eligible households. This provides the Secretary of State (SoS) with the appropriate powers to provide support for meeting costs on the use of energy. Designated bodies (such as local authorities) are empowered by section 15(1) to take steps to support delivery of the scheme, and Grant Determination letters set out the conditions and requirements on local authorities for that delivery. The Grant Determination letters include provision to clawback and subsequently return any unused funds to the Exchequer.

Sections 13(1) and 13(3)(b) of the Energy Prices Act 2022 provide powers to address the issues of contracting out to a third party in respect of a transferred matter in Northern Ireland. In Northern Ireland, it is possible to contract with a third-party contractor to process applications and payments to eligible households will be issued by UKSBS.

Full budget cover has been agreed for the EBSS AF payments. Development of EBSS AF has been in accordance with the relevant HM Government policies including HMT Green Book guidance and Managing Public Money.

Overall assessment: My assessment is that the regularity test is satisfied.

Propriety

The populations that this scheme aims to reach do not have a direct relationship with a domestic energy supplier. As a result, the support that this scheme provides cannot be delivered via energy suppliers. Therefore, the only feasible option is for households to apply for support. Given the inherent fraud risks of this approach, scheme design elements have been introduced to ensure there is sufficient protection of public money. Steps have been taken to reduce the potential for fraud from Local Authorities, the Northern Ireland delivery partner and at consumer level.

Overall assessment: My assessment is that the propriety test is satisfied.

Value for money

Economic appraisal was undertaken to assess the value for money of EBSS AF in accordance with the principles set out in HM Treasury’s Green Book. The analysis underpinning the assessment was independently quality assured following best practice in the BEIS evidence framework.

During the options analysis achieving the objective of strategic fit was decisive. This requires giving equivalent support to households who are not able to access main EBSS, therefore the preferred option was a one-off £400 payment over the winter. The delivery model analysis showed the best VfM came from in-house delivery, followed by local authority delivery. The local authority model became the preferred option due to feasibility; BEIS did not have the resources available or the right skills to deliver to the required timeframe. For Northern Ireland, after discussions with the Department for Economy (DfENI) and Department for Communities (DfCNI), it was made clear that, due to a lack of capacity and capability, delivery through local authorities in Northern Ireland was not feasible. Other options, such as delivery through third sector bodies, were discounted as capacity to control fraud and error risk was not proportionate to the amount of public money. A private sector delivery partner was therefore the only option certain of success given the time and resources available.

The benefits of EBSS AF are primarily in the form of additional energy consumption and avoiding health disbenefits from dangerous underconsumption. There will be social costs from greater negative externalities of energy consumption than in the counterfactual, however given the scale of price increases this intervention is not expected to place us off track for meeting our carbon budgets.

If EBSS is considered value for money, then EBSS AF likely is, but not just because it has the same household payment for the same benefits. The demographics of this project are more clinically vulnerable, such as elderly people in care homes and, in general, have lower incomes, such as park homes and Travellers, than the general population. This means each pound spent will have a greater utility for each household, and there will be less deadweight than in the main case, as they are more likely to spend their payments on heating. This will be partly offset from higher administrative costs per application. EBSS GB delivery through energy suppliers was chosen because it is the most efficient mechanism, while this scheme must reach those the main one cannot. Overall, the main EBSS case has been considered value for money and EBSS AF has a superior case.

In Northern Ireland, the payment will be topped up to £600 to include the £200 domestic AFP. The domestic AFP is included within the scope of the Energy Price Guarantee ministerial direction, which was sought due to the lack of certainty that could be provided against the Accounting Officer tests. This was particularly evident on the value for money test as a full evaluation of how the intervention compares with potential alternatives could not be carried out in the time available.

Overall assessment: My assessment is that the value for money test is satisfied. For AFP NI, there remain uncertainties related to the universal targeting of all fuel types and the level of support. However, noting that the £200 grant under the domestic AFP is included within the scope of the Energy Price Guarantee ministerial direction, I do not consider that the translation of this grant to Northern Ireland materially increases the risk to the extent that it would change my overall assessment of the EBSS AF NI scheme.

Feasibility

The design of EBSS AF benefitted from lessons learned from both EBSS GB and EBSS AFP NI, as well as other schemes delivered by local authorities, such as COVID Business Grants. Delivery timescales are highly dependent on a number of key milestones being realised, including a successful outcome of the delivery partner procurement in Northern Ireland, as well as the private betas in both Great Britain and Northern Ireland going ahead without exposing any critical issues that could impact go-live. The scheme will be delivered at pace on a streamlined timeline to provide support quickly. We have taken all possible steps to de-risk delivery challenges, especially through regular engagement with local authorities and targeted communications with other relevant stakeholders.

Overall assessment: My assessment is that the feasibility test is satisfied.

This assessment of the Energy Bills Support Scheme was considered and approved by the then Accounting Officer at BEIS on 22 December 2022.

I have prepared this summary to set out the key points which informed my predecessor’s decision. If any of these factors change materially during the lifetime of this project, I undertake to prepare a revised summary, setting out my updated assessment.

This summary will be published on the government’s website (GOV.UK). Copies will be deposited in the Library of the House of Commons and sent to the Comptroller and Auditor General and Treasury Officer of Accounts.

Sarah Munby
Permanent Secretary, BEIS
22 December 2022