Transparency data

Energy Bills Support Scheme and Alternative Fuel Payment Northern Ireland: Accounting officer assessment 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 and Alternative Fuel Payment Northern Ireland

Main scheme project stage:

Full EBSS AFP NI Business Case approved by Treasury Approvals Point December 2022. Scheme launch date:16 January 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 20 December 2022.

Introduction

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 16 September 2022.

The Energy Bills Support Scheme Alternative Funding (EBSS AF) is not within scope of this summary. An AOA summary for EBSS AF will be published at a later date..

Background and context

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. In Northern Ireland in particular, two thirds of households use home heating oil as their primary source of heat. Home heating oil is less efficient than gas and its price is extremely volatile. Before these rises we are seeing now, households in Northern Ireland spent more on energy costs than the UK as a whole, both in absolute terms and as a proportion of incomes.

The purpose of EBSS NI is to reduce the impact of high energy bills on households in winter 2022/23 and the purpose of AFP NI is to deliver support for those who use alternative fuels to heat their homes; however, this will be delivered to all NI households in recognition of the high prevalence of alternative fuel usage in NI. The EBSS AFP NI will provide a single £600 payment (consisting of £400 through the Energy Bills Support Scheme and the £200 Alternative Fuel Payment) to households across Northern Ireland.

EBSS AFP NI will be delivered by licenced domestic electricity suppliers: directly for direct debit customers, and via vouchers produced and distributed by a third-party voucher distributor for all other customers.

Assessment of EBSS AFP NI against the Accounting Officer standards

Regularity

The EBSS AFP NI grants will be delivered through domestic electricity suppliers, through a Direction made by the Secretary of State under section 22 of the Energy Prices Act 2022 (we have taken new powers through the EPA to provide the legislative footing needed to deliver the scheme in Northern Ireland – section 5). The Direction, in combination with a Deed, will impose legally enforceable obligations on all suppliers.

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

The schemes and single payment delivery mechanism is regular. The vires to deliver through electricity suppliers are generally robust and spending approval and HMT budget approval is in place.

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

Propriety

Given the need to transfer public money via domestic electricity suppliers to households, scheme design elements have been introduced to ensure there is sufficient protection of public money. BEIS will be directly responsible for monitoring and auditing, however, if the NI Utility Regulator (UREGNI) were to be alerted to a potential breach of the provisions of this scheme, they will activate their enforcement procedure. In addition, there are obligations suppliers must meet, which have been carefully developed, for public money to be released to them. Steps have been taken to reduce the potential for fraud at supplier and consumer level. Throughout the design of EBSS AFP NI, concerns around protecting public money, fraud and customer experience have been overcome or significantly reduced as far as practicable.

Given the scheme’s delivery model includes the ability for customers to withdraw cash via voucher redemption, there are security risks associated with this. However, Department for Business, Energy and Industrial Strategy (BEIS) have engaged with appropriate bodies to consider and implement necessary mitigations.

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

Value for money

EBSS NI

Economic appraisal was undertaken to assess the value for money of EBSS 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.

In early 2022, options for the GB EBSS scheme were developed that weighed up the need for delivery confidence and speed to reach those most in need, and the level of deadweight associated with the policy. As such, for NI, the following options were taken forward to shortlist; Option 1:do nothing (counterfactual), Option 2: £400 energy grant with no levy (delivered in GB and preferred option). Despite delivering a negative social net present value (SNPV), option 2 was selected, as the negative value is mainly due to the fact the SNPV includes the costs of negative externalities associated with increased energy consumption relative to the counterfactual and does not take into account considerable unquantifiable benefits. These include, preventing the exacerbation of health issues for individuals and supporting households, many of which would have to make difficult choices about where to prioritise their finances this winter. Given this, the quantified SNPV alone cannot be used to conclude on value for money. Consideration must also be given to the material unquantified benefits, and the alignment to the strategic objectives and critical success factors to deliver support to as many households as possible.

AFP NI

The AFP business case includes an assessment of several options for delivering AFP in Northern Ireland, including ‘do nothing.’ Options were evaluated based on cost, deliverability, likelihood of missing eligible households, and pace of delivery. The options appraisal showed that our proposed delivery model best balances speed, accuracy and management of a number of delivery risks which are unique to NI. Paying all households would be deliverable in January (if merged as a single payment with EBSS NI). The next best option was paying all households with PPMs and targeting households with credit meters, but this option would not have been deliverable until at least March. No other options were deliverable in Winter 2022/23.

The Autumn Statement (17 November 2022) also increased the AFP from £100 to £200. BEIS published the methodology for the original £100 as part of the impact assessment to the Energy Prices Act 2022 in October, however the rationale for £200 was not based on a specific calculation. The higher amount recognises the cost of living pressures caused by these rising fuel costs and takes into account potential variation in the future price of alternative fuels, similar to how the Energy Price Guarantee automatically does for households using gas central heating.

Overall assessment: Based on the above considerations, my assessment is that the value for money test is satisfied for EBSS NI and the single delivery mechanism across both schemes. 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 AFP NI scheme.

Feasibility

There are critical dependencies to enable successful delivery, which rely on actions of external bodies (electricity suppliers and a third-party voucher distributor) which HMG will have limited ability to directly influence. The scheme will be delivered at pace on a streamlined timeline to provide support quickly, which exacerbates risk around delivery. Whilst challenging, BEIS consider it is feasible for suppliers to deliver to all customer types from January 2023. We have taken all possible steps to de-risk feasibility challenges through linking delivery to the more advanced EBSS scheme and maintaining intensive engagement with suppliers.

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

Conclusion

As the Accounting Officer for BEIS I considered this assessment of the Energy Bills Support Scheme and Alternative Fuels Payment NI and approved it on 20 December 2022.

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

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
20 December 2022