Panel reflections on income-based support versus money off energy bills for fuel poverty support

In December 2025, we issued a call for evidence to stakeholders to explore the best way to provide fuel poverty support, specifically exploring the advantages and disadvantages of approaches which reduce the money spent on energy versus approaches which increase household income. The following organisations responded to the Panel’s questions:

  • Changeworks
  • Citizens Advice Scotland (CAS)
  • Energy Action Scotland (EAS)
  • Energy Saving Trust (EST)
  • Energy UK
  • Fuel Bank Foundation (FBF)
  • The Institute for Public Policy Research Scotland (IPPR Scotland)
  • The Poverty and Inequality Commission (PIC) and their Experts by Experience Panel
  • The Scottish Federation of Housing Associations (SFHA)
  • The Wise Group

The full analysis of these responses is on our website. This analysis demonstrates the complexity that exists in how best to deliver support for fuel poverty (and poverty more generally). Advantages of income-based, or cash-first approaches, include an emphasis on dignity, agency choice and flexibility. Disadvantages are primarily to do with the approach being less effective at reducing fuel poverty as technically defined through the Scottish definition of fuel poverty because additional income is often absorbed by existing debt or urgent costs, without improving energy security or home warmth.

Respondents viewed the advantages of reducing what is spent on energy via money off energy bills  as more effectively tackling fuel poverty since funds are guaranteed to be used for energy costs. This approach was, however, seen as limiting flexibility for households to address other urgent needs. There is a risk that payments may be absorbed by existing energy debt rather than addressing current consumption needs. Respondents highlighted that where energy bill support is used to pay off energy debt, rather than support current energy consumption, it undermines the purpose of the policy. It was felt that energy debt should be managed through a separate, dedicated programme.

Most respondents felt that there was a need for a distinct approach to fuel poverty. The reasons given for this primarily related to the existence of fuel poverty’s distinct drivers and the fact that they cannot be addressed through income measures alone. The long and short-term implications of not having adequate funds to pay for energy were emphasised, including the risk of self-rationing, energy debt, and impacts on health and wellbeing.

The Panel have reflected on these findings:

  • Fuel poverty support needs to be delivered holistically, recognising that people in persistent fuel poverty are the same people regularly attending health settings and other public services. Investing in preventative, relational support upstream has real potential to reduce that downstream demand, with the potential to provide better value for public money. To deliver this holistic support, the Scottish Government must consider how household fuel poverty support is delivered but also needs to increase investment in energy efficiency improvements and redesign and increase funding for advice services.
  • The Scottish Government’s success in reducing fuel poverty will ultimately be assessed against modelled fuel poverty levels using the current definition. Although, the definition is robust, there needs to be greater recognition by the Scottish Government of the relative objectives and impacts of policy interventions which help with the cost of living, aim to reduce poverty levels, and provide energy support on fuel poverty levels.
  • The findings strengthen the case for a social tariff. While the Panel recognise the significance of energy debt and its relationship to fuel poverty, it is inappropriate that bill support can be redirected to debt repayment before a vulnerable household sees any benefit from it. A social tariff applied as a unit rate discount avoids this situation, as well as giving individuals more control over energy use. Energy debt should be managed through an appropriate alternative method and level of recovery.
  • The decision on how to deliver fuel poverty support matters more for some households than others. Around 1 in 5 women in the UK experience economic abuse from a current or former partner[1], and among those who seek help, priority debts, including energy arrears, average £7,000[2]. For these households, cash payments can make things worse rather than better, because the money enters a household where someone else controls it. A direct bill reduction is much harder to divert as the benefit never enters the household as cash at all.
  • Furthermore, fuel poverty support systems should consider intra-household dynamics. There is strong evidence from randomised experiments that targeting cash transfers to female rather than male household heads leads to meaningfully different spending patterns, with more going to food and household essentials when the transfer goes directly to women[3].
  • As previously highlighted by the Panel in their Response to the Scottish Government’s Periodic Report on Tackling Fuel Poverty, there is a need to better evaluate fuel poverty support, both in terms of process and impact, including health system impacts.

[1] Surviving Economic Abuse / Opinium (2023). Survey of 2,072 UK women. One in five women (equivalent to 5.5 million) reported experiencing at least one economically abusive behaviour from a current or ex-partner in the last 12 months. Available at: https://survivingeconomicabuse.org/news/5-5-million-uk-women-experiencing-economic-abuse/

[2] Surviving Economic Abuse. Written evidence submitted to Parliament [RCW0057]. Of victim-survivors experiencing coerced debt supported by the Financial Support Line, 70% have priority debts — including rent and energy arrears — averaging £7,000. Available at: https://committees.parliament.uk/writtenevidence/126411/pdf/

[3] Armand A, Attanasio O, Carneiro P, Lechene V. (2016). The Effect of Gender-Targeted Conditional Cash Transfers on Household Expenditures: Evidence from a Randomized Experiment. IZA Discussion Paper No. 10133 / CEPR Discussion Paper No. 11465. Available at: https://ifs.org.uk/publications/effect-gender-targeted-conditional-cash-transfers-household-expenditures-evidence

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