Source · Select Committees · Public Accounts Committee
Recommendation 18
18
Accepted
Non-domestic energy support schemes face higher fraud risks due to market complexity.
Conclusion
The NAO found that the risk of error was greater for EBRS than for EPG because the non-domestic energy market is more complex, less regulated by government and has a wider range of consumers. For example, energy usage and intensity vary significantly more between different industries within the non-domestic sector than between households within the domestic sector. The price cap does not apply to non-domestic customers and Ofgem has less transparency over the tariffs that businesses are charged for their energy compared to the domestic sector. Some businesses negotiate energy bills via brokers, and many will be on bespoke tariffs. In contrast, approximately 80% of households are currently paying the same standard variable tariff determined by the price cap.41 We therefore asked the Department how it was managing the risk of fraud within schemes for non-domestic customers. The Department told us that it had dedicated teams working with each energy supplier to check in detail that the scheme was operating properly and fairly without fraud or error, and that it worked on anti-fraud through improving automation and investing in pre- and post-payment checks.42
Government Response Summary
The government agrees with the observation, affirming its serious approach to fraud and error risks and its ongoing proactive work to detect and reduce instances in energy affordability schemes, promising to provide estimated rates.
Government Response
Accepted
HM Government
Accepted
3.1 The government agrees with the Committee’s recommendation. Target implementation date: Winter 2023-24 3.2 The department always takes the risk of fraud and error very seriously. This has been a key consideration in the development and delivery of the schemes, which was done with the support of the Public Sector Fraud Authority from the outset. The department continues proactive work to detect and reduce instances of error and fraud associated with Energy Affordability Schemes and will work with external scrutiny providers to provide the Committee with the latest estimated rates.