State Pension

DWP facing pensions fiasco questions and more of this week’s finance news

· 10 min read

This week saw calls for the Department of Work & Pensions to face questions over the unpaid state pension pensions fiasco. Also, thousands of energy customers are facing bill shocks, Rishi Sunak has set up a new fund to help struggling households, and vast numbers of older workers could be facing redundancy.


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A leading MP has said that the Department for Work & Pensions should face questions regarding the pensions fiasco that has seen many new claimants going unpaid. The issue was reported last week, with claims that thousands of people who have now reached the state pension age have made their applications but received no money.

Last week, the DWP said that the backlog had occurred due to staffing issues and the Covid-19 pandemic. The Chair of the Work and Pensions Select Committee, Stephen Timms, has now said the issue needs to be raised with ministers as there are serious questions that must be faced regarding the administration involved in the pensions process.

Mr Timms said, “There are clearly serious questions to ask about the way the DWP administers the state pension.”

Many left experiencing issues due to non-payment of state pensions

Despite applying for their state pension in plenty of time, many have been left without any income. Thousands of people made their applications during the summer, but backlogs have resulted in them not receiving the pension payments they are entitled to.

Many said they had tried to contact the DWP by phone to chase their applications, with many on hold for a prolonged period before finally getting through.

This is one of the latest issues facing the DWP, with another separate scandal resulting in the underpayment of the state pension to vast numbers of women going back several decades. This resulted in more than £1bn in underpayments, which the DWP now has to deal with. 

Mr Timms said, "Only last week we learned that the department has underpaid pensioners by more than £1 billion because its systems were not good enough to pick up the mistakes. Now pensioners are having to wait weeks for the payments to which they are entitled and on which many of them will be relying. The committee will be raising this with ministers when Parliament returns."

Bill shocks on the horizon for millions of energy customers

There are warnings that millions of energy customers across the UK could be facing bill shocks over the coming weeks due to the collapse of energy suppliers. Following the recent failures of Avro Energy and Green, a further three suppliers – Enstroga, Symbio, and Igloo – went bust this week.

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Those who had their energy through these suppliers are now waiting to discover which energy company will take over their supplies. However, this could mean that they end up paying significantly more, with vast numbers of people facing hikes of hundreds of pounds a year. Octopus Energy, which is taking over Avro customers’ supply, has already moved to assure those customers they’ll be moved to their cheapest available tariff.

Customers worried about how they will cope

Between the energy firms that have recently folded, over a million customers will now have to be moved to other suppliers. In some cases, the tariffs they will be placed on could be far higher than they were expecting, and many are now concerned about how they will manage financially.

One energy customer, Daniel Cooke from Taunton, said: “I am deeply concerned as a young family of five how we are going to cope with what could be a huge rise in cost when we are allocated a new energy supplier. Where we have boxed clever for the last few years with Avro Energy, we are now going to be punished over the next few months running into winter. I know there are millions of people trying to balance the books. If the bills go up we’ll have to find extra money.”

Ofgem has rules in place that mean it deals with the customers of any collapsed energy firms and moves them over to a new provider automatically. The new supplier must consider any credit that the customer had on their account with the old supplier and refund them, but the tariffs they are moved to could be much higher than they were on previously.

With the Ofgem price cap increasing recently, the Big Six energy firms have all hiked their prices as far as they can. This could spell bad news for those who are moved over to these firms, as it means that their bills could potentially rocket.

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Those who are switched to another supplier by Ofgem are then free to switch again should they wish to do so. However, due to the increased price cap, most will find it impossible to get the same sort of deal they had been on with the collapsed providers.

New support fund set up by Chancellor to help households this winter

Chancellor Rishi Sunak has announced the launch of a new £500 million support fund to help struggling households this winter.

The Household Support Fund will be made available to local authorities across the UK from this month. Its launch is timed to coincide with the end of the furlough scheme introduced last year in response to the Covid-19 pandemic. It also comes just as the Universal Credit uplift of £20 per week ends.

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Small grants to be issued as part of the scheme

As part of this latest scheme, small grants will be issued to help households in need pay for essentials such as food, clothing, and energy. The end of the furlough scheme and the Universal Credit uplift will hit many households hard, and increases in energy costs are set to worsen the financial strain.

Therese Coffey, the Work and Pensions Secretary, said the government had decided the scheme was necessary to support those still struggling due to the pandemic.

Ms Coffey said, “The Government has ’helped millions of people provide for their families’ over the last year. Many are now back on their feet, but we know that some may still need further support. Our targeted Household Support Fund is here to help those vulnerable households with essential costs as we push through the last stages of our recovery from the pandemic.”

Mr Sunak also spoke about the new support scheme, stating that everyone needs to be able to afford the essentials. He said that this fund would help to ensure this goal was achieved. The money from the fund will provide additional support to those struggling due to rises in living costs and who are at risk of not being able to pay their bills or put food on the table as a result.

Warning for older workers that risk of redundancy now higher due to end of furlough

There are warnings of a new crisis facing older workers, with concerns that many may be facing redundancy due to the furlough scheme coming to an end. According to experts, the conclusion of the scheme, which has helped people remain in employment throughout the pandemic, means many over 50s could be at increased risk of redundancy.

A study was carried out by Rest Less, which is an advocate for older people. It described the jobs market for over 50s as ’precarious.’ In addition, the data showed that close to 600,000 more over 50s are now considered either economically inactive or unemployed compared to two years ago.

Job market ’devastated’ for older workers

Officials from the group said the Covid-19 pandemic has ’devastated’ the jobs market for those aged 50 and over. The figures showed that 35% of all employees still furloughed at the end of July were over 50s. This equated to 543,700 people in this age group.

In addition, the data showed that close to 455,000 of these people were aged between 50-64, while 88,000 were aged over 65.

Stuart Lewis, Founder of Rest Less, said, “The loss of any large proportion of society from the workforce is cause for significant concern, and risks holding back the economic recovery for all.  Whilst for some workers aged 50 and older, economic inactivity is a choice and a planned exit from the workforce, many others are finding themselves faced with an early retirement they are neither financially or emotionally prepared for.”

In the meantime, there have also been calls for the state pension age to be lowered to allow older workers to retire earlier and still receive an income. Many believe that this will pave the way for younger people to come off unemployment and break into the jobs market as more older workers leave their jobs to retire.

Universal credit cut could increase risk of eviction for 100,000 renters

A leading housing charity has expressed concerns that the loss of the £20 per week Universal Credit uplift could lead to mass evictions across the country. People of all ages will be affected by the end of the uplift, which is due to come into effect next week.

The additional £20 per week was given during the height of the pandemic and was designed to help those on welfare to keep their heads above water during difficult times. However, the government did make it clear that the uplift was a temporary one and would end at some point.

Despite government officials making this clear, news that the uplift was ending caused a lot of controversy. Many claimants said they would be left without enough money for food and essential costs, while supporters of the government’s move said that they managed before the pandemic and should be able to manage again.

A rise in the number of renters relying on benefits

One of the issues outlined by the charity, Crisis, is that more renters now rely on benefits. This has increased to one in three renters since the pandemic began, and it means that at least 100,000 renters could find themselves at increased risk of eviction now that the uplift is ending.

Jon Sparkes, the chief executive of Crisis, said, “For many struggling renters this cut could be the final blow that forces them from their homes. The UK government must change course and keep the £20 uplift so that people don’t needlessly lose their homes this winter and we have a fighting chance at recovery. The UK government assured people they would not lose their home because of the crisis; we must not fail them now.” 

Officials from the charity have also said that more money may be needed to support those who do end up being evicted or threatened with eviction. This could then put further strain on the public purse, with taxpayers funding the increased support and resources required to deal with the issue.

There are also concerns that not only will the cut in benefits make it more likely that many renters will be evicted, but it will also make it increasingly difficult for them to find a new property. Many other renters will be affected by the end of the furlough scheme, which will lead to an increase in renters who rely on benefits.

Image Credit: GroupEditor, CC BY-SA 3.0

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Reno Charlton
Reno Charlton
Reno Charlton has been writing since 2003. She has worked with a diverse client base around the world, across a variety of subjects and industry areas, specialising in lifestyle and health & wellbeing niches. In addition to her online work, Reno is also a published author and has written several children's books and short stories.
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