Source · Select Committees · Public Accounts Committee
Recommendation 3
3
Accepted
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 the energy support schemes will cost £69 billion, meaning that even relatively low rates of fraud and error will lead to significant loss to taxpayers. The risk of fraud and error is greater for the EBRS due to the complexity of the energy market for the non-domestic sector. For example, energy usage and intensity vary significantly more between different industries within the non-domestic sector than between households. The risk of fraud and error is also higher for targeted schemes such as the EBSS Alternative Funding Scheme, which has specific eligibility criteria and where consumers need to apply for the scheme, than in the schemes which are open to all customers. The Department drew on its lessons learnt from the pandemic and collaborated with the Public Sector Fraud Authority (PSFA) from the outset of the schemes and is working with local authorities to verify applicants’ eligibility for the EBSS Alternative Funding Scheme. The Department does not yet have an estimate of fraud and error has occurred through the schemes. The transfer of responsibilities from the former Department for Business, Energy & Industrial Strategy (BEIS) to the Department for Energy Security and Net Zero risks a lack of continuity in the approach to identifying and recovering payments through fraud and error. Recommendations 3a: The Department should, within 6 months, write to the Committee setting out fraud and error rates under the schemes and what it is doing to reduce this. Recommendation 3b: The Department should, within 6 months, write to the Committee outlining how it will ensure the lessons it has learnt from the energy schemes are not lost as BEIS splits into three separate entities.
Government Response Summary
The government agrees, stating that teams working on energy support schemes have transferred to the new department to ensure lessons learned are not lost. It describes how experience is being used to improve future delivery and how lessons are captured and shared through individual schemes and a cross-cutting exercise. The response does not address fraud and error rates.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. ensure the lessons it has learnt from the energy schemes are not lost. The teams working on the energy support schemes have for the most part transferred to the new Department for Energy Security and Net Zero, remaining together and allowing work on lessons learned and evaluation to continue uninterrupted. Experience and lessons from undertaking similar work (delivering through the COVID- 19 pandemic crisis and delivering subsequent schemes) were harnessed and used to improve delivery of energy schemes. Experience and lessons from undertaking these current schemes are being used to improve future delivery performance. Each individual scheme is working to ensure lessons are captured and shared, in addition to a cross-cutting exercise within the department to consider wider lessons and inform future approaches to delivery, including how best to support vulnerable and hard to reach households. As part of the project closure process the department will seek independent assurance to test the robustness of plans for the preservation and sharing of lessons with future schemes. Scheme and departmental leadership are committed to ensuring these are used to promote future performance improvement when each is closed. Comprehensive process (including lessons learned), impact and value-for-money evaluations are underway or are being commissioned for schemes for UK households and organisations. The evaluations are expected to run until summer 2025 and the findings will be shared with the Committee when available and will be published. was announced by Ofgem on 26 May 2023 and prices are forecast to continue to fall. Energy prices are affected by a range of factors and government is planning for a range of possible scenarios. This planning is being guided by extensive experience in delivering household support last year that is also taking onboard the lessons learned from doing so. The EPG will remain in place as a safeguard over this coming winter in the event prices spike again, and the EBDS will continue to provide support to non- domestic customers who have a contract with a licensed energy supplier until 31 March 2024. Some non-domestic customers who procure their energy from unlicensed energy providers will also be able to claim support under the Non-Standard EBDS until then. 5.3 In the meantime, the government has already committed to provide up to £900 in cost- of-living payments over 2023-24 paid across three instalments to the most vulnerable households on eligible means-tested benefits. This is in addition to £150 for pensioner households and £300 for individuals on eligible means-tested disability benefits. 5.4 In relation to capping support to those that use very large volumes of energy, high energy use is unavoidable for certain vulnerable households, for instance as a result of necessary medical equipment. As such, government have concluded that it should not progress with this option, and that support through the Energy Price Guarantee (EPG) should remain universal.