What does the Chancellor’s Cost of Living Support package mean in practice?

In the last week of May 2022 UK energy regulator Ofgem said the typical household energy bill was set to rise again in October by another £800, bringing it to £2,800 a year. This comes after bills have already risen by average £700 in April, while prices of food, fuel and other goods have also gone up significantly, pushing inflation (the rate at which prices rise) to a 40-year high at around 9%. Charities and campaign groups had already been calling for emergency support to people and to bring welfare benefit rates in line with inflation, so this latest announcement made this an even greater imperative for the government to take action.

On 26 May 2022 the Chancellor announced a number of important packages of support for people in the UK in an attempt to combat the ever-increasing impact of the cost of living crisis.

Here’s our 5 point summary of what you need to know about the package, and who it will help.

1. One-off £650 payment for households receiving ‘means tested benefits’

More than 8 million UK households receive ‘means tested benefits’, which means the benefit applies to them because their income and capital are below a certain level. Universal Credit is one example – you can view a full list of means tested benefits here.

£650 will be paid to qualifying households by the Department for Work and Pensions (DWP) in two instalments, the first will be made in July and the second in the Autumn. Payments from HMRC for those in receipt of tax credits will follow shortly after.

To qualify for the first payment, households will need to already be in receipt of a means tested benefit, or have started a claim for one of the qualifying benefits by no later than 25 May 2022. In the case of a joint claim, where someone claims a household benefit with their partner, they will receive one payment of £650 between them.

Importantly, the Government has confirmed that this £650 payment is tax-free, will not count towards the benefit cap, and will not have any impact on existing benefit awards. There will also be no application process – payments will automatically be paid directly to households across the UK that are eligible.

2. People on qualifying disability benefits will receive a one-off payment of £150 in September

Around six million people across the UK who receive qualifying disability benefits will receive a one-off payment of £150 in September, and where they also receive a means tested benefit this will be in addition to the £650 one-off payment. So for example, a person claiming both Universal Credit and Personal Independence Payment they will receive both payments. A full list of qualifying Disability benefits can be found here.

Again, these payments will be exempt from tax, will not count towards the benefit cap, and will not have any impact on any existing benefit awards, and there will be no application process.

3. All households will receive a non-repayable £400 grant which replaces the £200 Energy Rebate

All households in England, Scotland and Wales will get a non-repayable £400 grant to help with rising energy bills, replacing the much criticised £200 repayable so called “loan not loan” energy rebate. You do not need to be on benefits to get this support.

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.

Importantly, 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.

4. Pensioner Cost of Living Payment for people over pensionable age

Over 8 million pensioner households will receive an extra £300 this year to help them cover the rising cost of energy this winter. Households that receive the Winter Fuel Payment – which is homes with at least one person of pension age – will receive a top-up payment of £300 in November or December. For most pensioner households, this will be paid by direct debit, will not be taxable and does not affect eligibility for other benefits or the benefit cap.

Importantly households on lower incomes, who claim pension credit, will also receive the £650 mentioned earlier. A small group of pensioners with disabilities will receive a total of £1,500 when all the new payments and discounts they are eligible for are added up if they are on Attendance Allowance or DLA.

5. Additional funding for the Household Support Fund

The Government confirmed it is providing an extra £500 million of local support, via the Household Support Fund which was introduced to support those in most need with payments towards the rising cost of food, energy and water bills, and that the funding will be extended to March 2023, originally planned to end in October this year.

The Household Support Fund is distributed by Local Authorities who are also responsible for determining their own eligibility criteria, however the Government has committed to issuing additional guidance to ensure support is targeted towards those most in need, including people not eligible for the Cost of Living Payments set out above.

Adam Matthews, Social Welfare Instructor at Society Matters cic

You can read a full breakdown of the Cost of Living Support Package here. If you’d like to learn more about the benefits outlined, including means tested benefits and disability benefits, you may be interested in the Society Matters social welfare learning and development programme.

Get in touch for more information at hello@societymatterscic.com