The recent policy shift towards more targeted winter fuel payments, as discussed in Prof Gesche Huebner’s blog, raises important questions about who benefits from interventions in the energy market. The blog advocates for an equity-driven approach, where universal programmes are scrapped in favour of targeted support to those who need it most.
If we consider warmth a basic right and public good, however, universalism in energy policy should be protected. We accept the idea that everyone, regardless of income, should be able to access NHS services. This is underpinned by a shared understanding of healthcare as a basic necessity, and it would therefore be hard to justify the argument that free NHS services should be restricted only to those on very low incomes. There are good reasons to apply this principle to energy services too – namely that warmth is similarly essential to public health and wellbeing.
This idea of a common social contract was the foundation of the UK’s welfare state. The 1942 Beveridge Report set out a vision of universal support to all citizens, rather than targeting only the poorest in society, underpinned by the idea that services necessary to participate in society should be provided through public institutions rather than private markets. It also made the more pragmatic argument that political support for the welfare state could be sustained if all social groups had a stake in the continued provision of high-quality welfare services.
Critics of universalism often point to the apparent inefficiency of providing benefits to those who may not need them. However, means-testing invariably creates ‘cliff edges’ where those just above the threshold may find themselves worse off than those receiving benefits. The blog also rightly points out the challenges in implementing targeted policies, such as lack of awareness about benefit eligibility, administrative complexity, and reluctance to apply for means-tested support.
Although a significant proportion of winter fuel payments may have been allocated to households who could already afford to heat their homes, the trade-off for eliminating this ‘deadweight’ demographic will be to cut off support to an estimated 2 million pensioners who need it. In 2022, 4 in 10 people eligible for pension credit did not claim it, and while Chancellor Rachel Reeves has announced a campaign to promote applications to pension credit alongside the termination of universal winter fuel payments, little time has been allowed for this campaign to reach pensioners.
Ultimately, the debate over universalism in energy policy reflects deeper questions about the kind of society we wish to create. Residualist welfare systems are characterised by the principle that the state should only support those least able to meet their basic needs through private markets. The state assumes a restricted role, leaving most people to fend for themselves. In this paradigm, we abandon any collective commitment to ensuring everyone’s basic needs are met.
In such systems, the question of who ‘deserves’ support will always be present – but no matter how the threshold is set, people in need of support will fall through the cracks. It’s not clear how more sophisticated ‘targeting’ would solve this enduring problem, and it would be more complex and expensive to administer than universal support. It’s for this reason that London has started providing universal free meals in state primary schools. Now that all children have access to this basic necessity, teachers have reported improved attendance and participation in learning. That some free meals are going to children from more affluent families is a necessary part of this shared social contract.
That’s not to say that winter fuel payments represent an ideal form of universalism in the energy system. For one thing, it’s hard to argue they were a truly universal form of support, being provided only to pensioners and ultimately as a subsidy to private energy companies. A universal approach to meeting basic needs usually means building public institutions that offer services to all regardless of income.
But rather than trying to more narrowly target support to meet as basic a human need as warmth, we should explore approaches such as a ‘national energy guarantee’ system, as proposed by the New Economics Foundation, which would protect essential energy needs for all households at a low cost while applying higher rates to excessive consumption. This proposal would include allowances and social tariffs for low-income households with higher energy needs. Such a system could provide a universal safety net, avoid means-testing, and incentivise energy efficiency.
In essence, the shift away from universal winter fuel payments risks exacerbating energy inequality rather than addressing it. While targeting support may seem fiscally prudent, it overlooks the broader benefits of ensuring warmth as a basic right for all. Winter fuel payments may not have been the ideal form of universal support, but we should not abandon the idea that access to adequate heating is a fundamental social right.