UK

Officials warned they did not have enough time to assess energy support plans

August Graham, PA Business Reporter
Mon, 6 February 2023 


Civil servants warned ministers that they did not have enough time to properly assess some of the energy support packages that will together cost the taxpayer about £69 billion, an official report has found.

The programmes were rushed through after ministers had held off announcing extra support because they were waiting for the Conservative leadership election to play out.

It meant that civil servants only had three weeks to put a full plan in place after Liz Truss in September announced the Energy Price Guarantee. The scheme capped bills for households at 34p per unit of electricity and 10.3p for gas.

They also only had a short time to assess an equivalent scheme for businesses.

A report from the National Audit Office (NAO) reveals that the accounting officer for the Department of Business, Energy and Industrial Strategy (BEIS) had raised objections to both schemes.

The accountant was given so-called “ministerial direction” – where politicians push ahead with a scheme despite the concerns of officials.

The accounting officer said that the pace at which the business support had been developed brought “inevitable risks”. They also said that small rates of fraud in the household scheme would have “significant financial impacts”, the NAO said.

In May last year, then chancellor Rishi Sunak announced a £400 payment to each household in the country.

However, as the months dragged on, it became clear that this would not be enough to protect thousands of vulnerable families.

Boris Johnson, who said in early July that he would resign, refused to announce extra support. It was an issue for his successor, he said.

But that successor – Liz Truss – did not get into office until early September.

With bills expected to spike at £3,549 for the average household from October, she needed to get something in place quickly.

This left civil servants with just weeks to put her ideas into practice.

The National Audit Office said that the Government had to “make compromises” to ensure that support reached the places it was needed on time.

As a result, the taxpayer ended up supporting households that could have managed fine on their own, the NAO said.

So far, £16.3 billion has been paid out as part of the three biggest schemes.

The Energy Bill Support Scheme (EBSS) – the plan to give every household £400 which Rishi Sunak announced in May while still Chancellor – had cost £7.7 billion by the end of December.

The Energy Price Guarantee – Liz Truss’s household support – had cost £7 billion.

Meanwhile, the Energy Bill Relief Scheme, which helps businesses, had cost £1.6 billion.

BEIS acknowledged to the auditors that it had created “value for money risks”, in a bid to roll out the support as rapidly as possible.

The report also showed that the fraud and risk assessment on Mr Sunak’s Energy Bill Support Scheme was not ready until weeks after the scheme had gone live.

This is despite officials having almost five months to prepare for the launch.

The same assessment of the Energy Price Guarantee again only finalised after the scheme was launched.

However, in this case, officials only knew about the policy three weeks before it was set to launch.

NAO boss Gareth Davies said: “Similar to the Government’s assistance during Covid, the energy bills support schemes were introduced universally, and at speed, to reduce the impact of soaring energy costs for people and businesses.

“This approach led to compromises – introducing these interventions at speed meant that BEIS has less time to consider fraud and error risks; and their universal nature meant that a significant number of households received financial support they did not need’.

“As the Government seeks to target future assistance, it must be mindful of the risk of introducing complexity which could aid fraudsters. The National Audit Office will continue to monitor these schemes to understand their impact, particularly the costs and benefits of universal versus targeted support.”

Meg Hillier, chair of the Public Accounts Committee, said: “Today’s NAO report shows that BEIS moved quickly to shield most people and business from soaring energy prices, by introducing universal support schemes.

“However, it must take steps to better protect taxpayers, now and in the future.

“To introduce support, at pace, it accepted a greater risk of error and giving to those who do not need it.

“As it refines its offer, BEIS will need to juggle protecting citizens and businesses from unacceptable hardship, while managing the risk of fraud and error.

“It must grasp the chance to learn lessons by planning for the long term and developing options for the next crisis.”