In response to the various concerns voiced with regard to the present cost of living crisis, the Chancellor, Rishi Sunak, announced a raft of support measures in Parliament 26 May 2022. This update summarises the grants and other financial support packages provided to counter these concerns.
Energy Bills Support Scheme doubled to a one-off £400
Households will get £400 of support with their energy bills through an expansion of the Energy Bills Support Scheme.
- As well as doubling the £200 of support announced earlier this year, the full £400 payment will now be made as a grant, which will not be recovered through higher bills in future years. This is a sensible and welcome change.
- Energy suppliers will deliver this support to households with a domestic electricity meter over six months from October. Direct debit and credit customers will have the money credited to their account, while customers with pre-payment meters will have the money applied to their meter or paid via a voucher.
- This support will apply directly for households in England, Scotland, and Wales. It is GB-wide and equivalent support will also be delivered to people in Northern Ireland.
- This support is in addition to the £150 Council Tax rebate for households in England in Council Tax bands A-D, which was announced in February, and which millions of households have already received.
A £650 one-off cost of living payment for those on means tested benefits
More than eight million households on means tested benefits will receive a payment of £650 this year, made in two instalments. This includes all households receiving the following benefits:
- Universal Credit, Income-based Jobseekers Allowance, Income-related Employment and Support Allowance, Income Support, Working Tax Credit, Child Tax Credit, Pension Credit.
- DWP will make the payment in two lump sums - the first from July, the second in the autumn. Payments from HMRC for those on tax credits only will follow shortly after each to avoid duplicate payments.
- Claimants will need to be in receipt of one of these benefits, or have begun a claim which is later successful, as of 25th May 2022 to be eligible for the first of the two instalments. HMRC and DWP will provide further guidance, and the government will set out the eligibility date for the second instalment, in due course.
- This payment will be tax-free, will not count towards the benefit cap, and will not have any impact on existing benefit awards.
- The government will make these payments directly to households across the UK.
- Legislation will be introduced shortly to allow payments to be made to this timetable.
A one-off £300 Pensioner Cost of Living Payment
Pensioner households will receive an extra £300 this year to help them cover the rising cost of energy this winter. This additional one-off payment will go to the over eight million pensioner households across the UK who receive the Winter Fuel Payment and will be paid on top of any other one-off support a pensioner household is entitled to, for example where they are on pension credit or receive disability benefits. Eligible households currently receive between £200 - £300, so the payment will represent at least double the support for this winter.
- The Winter Fuel Payment (including the extra Pensioner Cost of Living Payment) is not taxable and does not affect eligibility for other benefits.
- All pensioner households will get the one-off Pensioner Cost of Living Payment as a top-up to their annual Winter Fuel Payment in November/December. For most pensioner households, this will be paid by direct debit.
- People will be eligible for this payment if they are over State Pension age (aged sixty-six or above) between 19 - 25 September 2022. There are certain circumstances where an individual above State Pension age does not qualify for the Winter Fuel Payment
- The government will make these payments directly to households across the UK.
£150 Disability Cost of Living Payment
Around six million people across the UK who receive the following disability benefits will receive a one-off payment of £150 in September: Disability Living Allowance, Personal Independence Payment, Attendance Allowance, Scottish Disability Benefits, Armed Forces Independence Payment, Constant Attendance Allowance, War Pension Mobility Supplement.
- We know people with disabilities may face a wide range of additional costs, such as specialist equipment, specialist food, and increased transport costs, and this payment will help with these costs as they are likely to have increased. Claimants must be in receipt of, or have begun an eventually successful claim for, one of these benefits as of 25th May 2022 to be eligible for this additional payment.
- For the many disability benefit recipients who receive means tested benefits, this £150 will come on top of the £650 they will receive separately.
- These payments will be exempt from tax, will not count towards the benefit cap, and will not have any impact on existing benefit awards.
- The government will make these payments directly to eligible people across the UK.
£500m increase and extension to the Household Support Fund
To support people who need additional help, the Government is providing an extra £500 million of local support, via the Household Support Fund, which will be extended from this October to March 2023.
- The Household Support Fund helps those in most need with payments towards the rising cost of food, energy, and water bills.
- The government will issue additional guidance to Local Authorities to ensure support is targeted towards those most in need of support, including those not eligible for the Cost-of-Living Payments set out on 26 May 2022.
- This brings the total amount provided through the Household Support Fund to £1.5 billion since October 2021.
- The Household Support Fund is administered by local councils in England and further information will be available directly from them. Individual councils will determine eligibility.
- The Barnett formula provides a share of this funding to the devolved administrations in Scotland, Wales, and Northern Ireland so they can decide how to provide support.
Funding
In total, it is estimated that the cost of these measures will be £15bn. The Chancellor announced a 25% Energy Profits Levy payable by the oil and gas industry, to be followed by a similar - but undisclosed - levy on electricity generation sector, when the details are agreed later this year. £5bn will be raised by this Levy in the first year. It is not clear how the remaining £10bn will be funded.
The impact of the levy is uncertain as it was also announced that the oil and gas industries are to be given a new 80% Investment Allowance. This means that for every £1 committed to qualifying investments will result in a 91p tax saving.