Financial ‘cost of living’ measures announced to help struggling households

Chancellor of the Exchequer, Rishi Sunak,

The government has announced a new package of financial support to help in the cost of living struggle.

Chancellor Rishi Sunak presented the cost of living package to Parliament today (May 26) with measures meaning eight million of the most vulnerable households will get £1,200 of one-off support in total this year, with all domestic electricity customers receiving at least £400.

The significant intervention includes a new, one-off £650 payment to low-income households on Universal Credit, Tax Credits, Pension Credit and legacy benefits, with separate one-off payments of £300 to pensioner households and £150 to individuals receiving disability benefits – groups who are most vulnerable to rising prices.

Rishi Sunak also announced that the energy bills discount due to come in from October is being doubled from £200 to £400, while the requirement to pay it back will be scrapped. This means households will receive a £400 discount on their energy bills from October.

The new Cost of Living Support package will mean that almost all of the eight million most vulnerable households will receive at least £1,200 of extra support this year, including the £150 council tax rebate.

Mr Sunak also announced a £500 million increase for the Household Support Fund, delivered by Local Authorities, extending it from October until March 2023. This brings the total Household Support Fund to £1.5 billion.

To help pay for the extra support – which takes the total direct government cost of living support to £37 billion – the Chancellor said a new temporary 25% Energy Profits Levy would be introduced for oil and gas companies, reflecting their extraordinary profits. At the same time, in order to increase the incentive to invest. the new levy will include a generous new 80% investment allowance.

Surging commodity prices, driven in part by Russia’s war on Ukraine, has resulted in the oil and gas sector making extraordinary profits. Ministers say they want to see the sector reinvest these profits in oil and gas extraction in the UK.

This is why the Energy Profits Levy has an investment allowance built in.The new Levy will be charged on oil and gas company profits at a rate of 25% and is expected to raise around £5 billion in its first 12 months, which will go towards easing the burden on families. It will be temporary, and if oil and gas prices return to historically more normal levels, will be phased out.

The new Investment Allowance incentivises companies to invest through saving them 91p for every £1 they invest. This nearly doubles the tax relief available and means the more a company invests, the less tax they will pay.

The Levy does not apply to the electricity generation sector – where extraordinary profits are also being made due to the impact that rising gas prices have on the price paid for electricity in the UK market.

Energy payment

Households will get £400 of support with their energy bills as a grant, which will not be recovered through higher bills in future years. 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.

Benefit payment

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.This payment will be tax-free, will not count towards the benefit cap, and will not have any impact on existing benefit awards.

Pensioner 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 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.

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 66 or above) between 19 – 25 September 2022.

Disability payment

People across the UK who receive the following disability benefits will receive a one-off payment of £150 in September: For the many disability benefit recipients who receive means tested benefits, this £150 will come on top of the £650 they will receive separately.

  • Disability Living Allowance
  • Personal Independence Payment
  • Attendance Allowance
  • Scottish Disability Benefits
  • Armed Forces Independence Payment
  • Constant Attendance Allowance
  • War Pension Mobility Supplement

27 Comments

        • No one listens to you Peter! At least I won’t be forced to have a £200.00 loan I don’t need. But what happens afterwards, when inflation will continue to eat away at the poorest incomes for years to come! More child poverty, and people being forced to decide whether to heat or eat I suppose!

          • Exactly, bills aren’t going up get lower in the future, I’ll bet. The help is needed every year, are they making the rises permanent? I don’t think so.

    • So Conservatives tax increase and higher spending = Good. Labour tax increase and higher spending = bad.

  1. lets take a look again only people on means tested benefits will receive the £650 if you’re on ESA contribution based you won’t get it, although you’re already getting a lower amount than those on means tested benefits there is always a catch wait till its looked into fully, and then we see what’s what its never as good as they make it sound mark my words

  2. Now that is a big help for low income households and the not so well off pensioners. Well done.

    • No it isn’t. Doesn’t cover the price cap they’ve allowed to the record profit energy companies. There isn’t a fuel price crisis it’s profiteering from a war. It ridiculous to suggest they are helping by giving back less than they are forcing. The energy cap increase is a scandal and this doesn’t address it. The cap should be frozen.

  3. All well and good , but I would prefer permanent upgrades to wages and benefits rather than one-off payments. After all, wage and benefits increases help to keep money working. Paid to recipients, the money will mostly be used to buy household essentials in local shops. Keeping the shops in business. So keeping the staff employed. So the staff are also able to buy more. A virtuous circle.
    Governments that constantly restrict the money available to the citizens are not just mean and miserly, they are also damaging the economy.
    So let’s not hear complaints about “but who will pay all this money back!?” It will be paid back many times over in the taxes paid by all the people who are kept in work when it is spent, as well as all the consumers who are now able to spend more and ,so, pay more VAT.
    But, like I say, all these One-off payments are just that.One-offs.
    We are in danger of slipping back into another “austerity economy” once the impact of temporary Benefit rises wears off.

  4. These measures, whilst welcome, will only add to the national debt. What we need is something to boost the economy. Maybe something to really help with international trade – maybe with the world’s biggest free trade bloc that happens to be on our doorstep mmm I wonder what that could be?

  5. According to the news, the government is giving us a package worth £15,000,000,000
    That’s £15B of our money he’s giving.
    But it’s going straight to the coffers of the energy providers.
    So, Mr Sunak is shifting £15B of public money into the pockets of private enterprise.
    And for what? The cost of watching gas and oil squirt out of the ground hasn’t risen.
    So, our chancellor is handing energy companies huge amounts of our money: for nothing.
    And it gets worse (or better, depending on your point of view).
    To get this money, the chancellor will have to increase borrowing. So very rich people will lend us the money to pay very rich people, and will then charge us interest for years to come.
    Something stinks

  6. Put energy cap up by over a grand and then take £400 back – the mega profits “we don’t know what to do with the money” energy companies are still well over £600 up on the deal and we are all down £600 at least.

    Yeah thanks Rishi. Haha.

    Too many Daily Mail readers here applauding them “helping” with a mess they created and this is in fact not help. They’ve allowed the cap to be put up and this isn’t even half of what they’ve allowed.

    Smoke and mirrors

  7. The Conservatives are their worst enemies. They sell off utilities and they ( utilities companies ) go on to make billions of pounds profit off consumers. However it’s the government who get all the flack from voters the government add a green tax to the gas and electric bills making bills even higher. There are billions of tons of coal buried that could be used yet the government forced the mines out of business the climate change idiots cause all our bills to rise.

  8. I become a pensioner in October so won’t be eligible! So that means I don’t get help with heating during the cold winter months when I need will need it. Yet again, a quick “fix” not well thought through.

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