National Audit Office report: Energy bills support schemes ‘undoubtedly successful at protecting majority of consumers’

Energy bills support successfully protected many people and businesses during 2022 and 2023 from rising energy prices, at a cost of £44 billion – two thirds lower than the original estimate of £139 billion - a new National Audit Office (NAO) report has found.

The UK government introduced eight different support schemes (see Notes to Editors) for households and businesses in 2022 and 2023, after COVID-19 and the outbreak of war in Ukraine caused average annual household bills to increase from £1,277 in winter 2021-22 to more than £4,000 by the start of 2023.

The final cost of the schemes was lower than the original estimate in part due to lower-than-expected wholesale energy prices and a warmer than average winter in 2022.

DESNZ reported that the schemes successfully prevented around 289,000 households in England from going into fuel poverty.

Stakeholders have highlighted other positive impacts from the schemes, such as fewer people choosing to disconnect or ration their energy use (see Notes to Editors).

However, the Department also estimated that between 2022 and 2023 - even after government support - overall around 238,000 households fell into fuel poverty.

The Government deserves credit for working quickly to introduce the schemes. But moving at speed meant the government had to accept risks to value for money, and providing universal support meant some people received financial assistance they did not need.

There was a comparatively low rate of fraud and error, which DESNZ estimates at 0.7% of energy schemes payments, worth £291.8 million of the total programme expenditure of £44bn. This was lower compared with some COVID-19 support schemes – for example, the estimated level of fraud and error for the Bounce Back Loan Scheme was 11%, worth £4.9bn (See Notes to Editors). 

Despite distributing financial support to most households quickly, there was low take-up among harder- to-reach groups, such as people living on boats (see Notes to Editors). For those households, without a direct relationship with an electricity supplier, take-up was around one-fifth of DESNZ's provisional estimate of potentially eligible recipients. 

DESNZ is taking steps to understand what it could have done to improve take-up, while considering how a range of interventions might help mitigate the risks of a future energy crisis.

The government's understanding of commercial sector energy use was poor during implementation, which led to identical support for all businesses, despite differences in their energy consumption compared to domestic households, and capacity to engage with energy suppliers directly. DESNZ considers its understanding of the non-domestic sector has improved since implementing the schemes. 

Alongside completing its own evaluation of the energy support schemes, DESNZ is considering the inflationary impacts of the schemes. 

DESNZ is also considering future interventions if prices were to rise again, such as data matching which might help identify low‑income households to help target future financial support, but these are at an early stage.  

The government is taking action to reduce energy bills, ranging from developing renewable energy markets to improving the energy efficiency of homes and reducing emissions from buildings, but these interventions will take years to have an effect. 

Gareth Davies, head of the NAO, said:   

“The government acted quickly to provide tens of billions of pounds of support to help protect people and businesses from soaring energy price rises, with relatively low levels of fraud and error.  

“DESNZ needs to prepare for future energy price spikes and understand how any potential future interventions can be provided in a way that maximises value for money. This work is at an early stage of development, and it is not clear how DESNZ will respond in reality.” 

Notes to editors

The eight energy support schemes are (see pages 6 and 7 of the report):   

Fuel poverty in England is measured using the Low-Income Low Energy Efficiency measure. A household is considered to be fuel poor if they are living in a property with a fuel poverty energy efficiency rating of band D or below and if they were to spend the required amount to heat their home, they would be left with a residual income below the official poverty line – page 33, footnote 14 of the report. 

‘Self-disconnection' is defined as interruption to electricity or gas supply by consumers using prepayment meters because of a lack of credit on the meter or account. ‘Self-rationing', is where customers limit either energy use to save money or restrict spend in other areas to ensure sufficient funds are available to keep the prepayment meter topped up (page 33, footnote 15 of the report). 

The Bounce Back Loan scheme was not universal and allowed applicants to self-certify their application document (NAO, Bounce Back Loans: an update, December 2021). The Public Sector Fraud Authority (PFSFA) estimated in March 2023 that the level of fraud and error in government spending excluding taxation and welfare expenditure ranged from 0.5% to 5% (NAO, Tackling fraud and corruption against government, March 2023, “Central government expenditure not covered above: (b) Lower estimate of fraud and error in other government expenditure (0.5%); (c) Upper estimate of fraud and error in other government expenditure (5%)”.) 

‘Harder-to-reach households' includes a wide range of groups, including partially or wholly self-funded care home residents, tenants in certain private or rented social homes, people in properties supplied by self-generated electricity such as solar panels, park home residents, travellers on fixed sites, boat dwellers on fixed moorings and farmers living in domestic farmhouses – page 37, footnote 18 of the report.