Millions of households across the UK are struggling to make their incomes stretch to cover the rising cost of living. That is why the Government is providing over £15 billion in further support, targeted particularly for those with the greatest need. This package is in addition to the over £22 billion announced previously, with government support for the cost of living now totalling over £37 billion this year. This means that almost all of the eight million most vulnerable households will get £1,200 of one-off support in total this year to help with the cost of living, with all domestic electricity customers receiving at least £400.
Today the Government will bring forward our Cost of Living Payments Bill, enabling us to provide families with cash cost of living payments from 14 July – supporting the lowest income families in our society in the face of global cost of living pressures. The first initial automatic instalment of the £650 payment will be £326, paid on 14 July, with the rest of the payment to follow in the Autumn. Pensioners will receive an extra £300 while disabled households will get a £150 payment – on top of the £150 council tax rebate paid in April and the £400 discount on energy bills this Autumn.
Yesterday the Government announced an extra £18 million of funding through our Holiday Activities and Food Programme, helping schools provide infant free school meals in recognition of the rising cost of living. Our Holidays Activities and Food Programme, since its expansion last year, has made a vital difference to families and this support will allow it to go further.
*** UPDATE: Cost of Living Support Package (26/05/2022)***
The Government has announced a targeted and temporary Energy Profits Levy on profits of oil and gas companies. The new Levy will be charged on profits of oil and gas companies at a rate of 25%, on top of the existing 40% headline rate of corporation tax. It will be temporary, and as the oil and gas price returns to more historically normal levels, the Levy will be automatically phased out. The Levy will be in place from today, and will raise around £5 billion over the next twelve months. The Government is also evaluating the scale of the extraordinary profits made by the electricity generation sector, and considering the appropriate steps to take.
- Doubling the October £200 rebate to £400 and turning it into a cash grant.
- £650 cost of living payment for every household on means-tested benefits.
- £300 pensioner cost of living payment for every pensioner household in receipt of Winter Fuel Payment.
- £150 disability cost of living payment for those in receipt of disability benefits.
- £500 million to help hard cases.
The Government’s support to help families with the cost of living now totals over £37 billion. Today’s package of measures provides support worth over £15 billion. Combined with the over £22 billion of support we have already announced, the Government is supporting families with over £37 billion – or 1.6 per cent of GDP, similar/higher than France, Germany, Italy and Japan. Over three-quarters of our support will go to the most vulnerable households – including pensioners.
In more detail...
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.
- 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 to households in England, Scotland, and Wales.
- 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.
£650 one-off Cost of Living Payment for those on means tested benefits:
More than 8 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.
One-off £300 Pensioner Cost of Living Payment
- Pensioners are disproportionately impacted by higher energy costs, and many low-income pensioner households do not claim the means tested benefits they are entitled to.
- Around 8 million pensioner households already receive Winter Fuel Payments, which we have increased to £300. We will send all existing recipients an additional one-off £300 cash payment, due to be paid out automatically in November/December.
- This additional one-off payment will go to the over 8 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 66 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 which can be found here on gov.uk [https://www.gov.uk/winter-fuel-payment/eligibility]
- 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 of 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- this will be Castle Point Borough Council for local residents in Benfleet/Hadleigh/Thundersley SS7 and Canvey SS8 postcodes.
This builds on our existing package of support to help families address the cost of living:
- £9 billion to help households address rising energy costs. The Government has provided a non-repayable £150 cash rebate for homes in Council Tax bands A-D, equivalent to 80% of all households. The Government has also provided £144 million of discretionary funding for local authorities to support households.
- The National Insurance personal threshold will rise from £9,500 to £12,570 from July. At the Spring Statement 2022, the Government raised the threshold from £9,500 to £12,570 from July – the largest increase in a starting personal tax threshold in British history, equivalent to a £6 billion tax cut for nearly 30 million workers and worth over £330 a year starting in July, across the entire United Kingdom. This is the largest single personal tax cut in a decade.
- Cutting tax for low-income families by reducing the Universal Credit taper rate. To make sure work pays, and to help the lowest-income families in the country, the Government cut the taper rate by 8 pence, taking it down from the current 63p to 55p. This is a tax cut for 2 million low-income families worth £2.2 billion this year, or an extra £1,000 in their pocket. Together with other tax changes, as well as the NLW increase in April, a single mother of two working full-time will be better off by around £1,600 a year – while a working couple with two children, one working full-time and one part-time, will be better off by £3,000 a year.
- Cutting the basic rate of income tax to 19 pence in 2024. It would be irresponsible to do this now, but by 2024, inflation is forecast to be back under control, debt will be falling sustainably and the economy growing. The Government will therefore cut the basic rate of income tax by 1p, a tax cut worth £5 billion for over 30 million workers, pensioners and savers – only the second income tax cut in two decades and the first income tax cut for 16 years. This will be worth around £175 for a typical taxpayer.
- Scrapping VAT on energy-saving materials. Our current VAT relief for families installing energy-saving materials used to be more generous. But the European Court of Justice in 2019 forced us to add complex red tape that limited eligibility, removed certain items from qualifying, and restricted VAT relief to 5%. The Government is now using our Brexit freedoms to remove this 5% VAT charge over the next five years, reverse the EU’s decision to take wind and water turbines out of scope, and remove all the EU-imposed red tape, adding up to a £250 million tax cut for energy efficiency.
- Additional support to help household energy bills. Cold weather payments provide £25 per week in cold weather, supporting 4 million vulnerable households. The Warm Homes Discount provides a £150 rebate on energy bills each for 3 million low-income households. Our Energy Company Obligation saves £300 on bills for 300,000 people in fuel poverty, worth £1 billion.
- Boosting home insulation. Investing over £3 billion to improve energy efficiency in almost 500,000 low-income, fuel poor households, meaning average savings of nearly £300 per year with grants of £25,000. This is being delivered through:
- Social Housing Decarbonisation Fund: saving homes £270 per year, worth £3.8 billion for 250,000 vulnerable households, with no cost to the tenant as the upgrade is funded by the landlord and the Government.
- Home Upgrade Grants: £10,000-£25,000 Government grants delivered through councils, with only a one-third contribution from landlords, saving homes £350 per year for 246,000 homes.
- Boiler Upgrade Scheme: £500 million to provide nearly 100,000 households with a £5,000 grant to replace their boiler with low carbon heating technologies.
- Significantly increasing the National Living Wage. The National Living Wage increased on 1 April 2022 by 6.6% to £9.50 per hour for those over the age of 23 – an increase worth over £1,000 to over 2 million full-time workers this year; over £5,000 for a full-time worker since the introduction of the NLW by a Conservative Government in 2016; and over £6,000 since 2010. The Government is committed to going further, so that the National Living Wage reaches two-thirds of median earnings for those 21 and over by 2024.
- Cutting and freezing alcohol duties. The Government is introducing a new Draught Relief which will apply a new, lower rate of duty on draught beer and cider – cutting duty by 5%, the biggest cut to cider duty since 1923 and the biggest cut to beer duty for 50 years. This will boost British pubs by nearly £100 million a year – and means a permanent cut in the cost of a pint by 3p. And the Government is freezing all alcohol duties for the 3rd in a row, including for whisky – a tax cut for families worth £500 million every year.
- Permanently increasing the generosity of the Local Housing Allowance for housing benefits. The Government has permanently upped the LHA to the 30th percentile of market rates last year and kept cash levels at these higher rates going forward. This costs nearly £1 billion a year and has meant over 1.5 million households are benefitting from an additional £600 per year compared to before the pandemic.
- The Government is investing over £200 million a year to continue the Holiday Activities and Food Programme to provide enriching activities and a healthy meal for disadvantaged children during the holidays.
- Freezing the TV licence from 1 April 2022 until 2024, helping hard-working people keep costs down over the coming years.
- Helping councils with a £65 million package, to support low-income earners in rent arrears.
- Delivering £670 million to help local authorities support households with council tax bills.
- Freezing NHS prescription charges will be frozen for the first time in 12 years to help with the cost of living. Charges usually increase in line with average inflation. This year – in a move not seen for over a decade – the cost for prescriptions will remain the same, meaning people in England who pay prescription charges are saving £17 million overall. You may also be able to get free NHS prescriptions, dental treatment, eye tests and help with other NHS costs.
- Providing extra money for carers. You could get £69.70 a week if you care for someone for at least 35 hours a week and the person you care for gets certain benefits. You do not have to be related to, or live with, the person you care for.
- Pension Credit for those on low income. You could get extra money to help with your living costs if you’re over State Pension age and on a low income, even if you have savings or own your own home.
- Budgeting Loans. You may be eligible for a Budgeting Loan if you’ve been on certain benefits for 6 months. This can be used for household items, rent in advance and travelling costs.
- Cheaper phone and broadband. You may be eligible to move onto a social tariff if you're struggling to afford your broadband or phone services.
- Help paying your water bill. Many water companies run hardship schemes or fund independent charitable trusts which can help you pay your bills.
- Help with childcare costs:
- Tax-free childcare. You can get up to £500 every 3 months (up to £2,000 a year) for each of your children to help with the cost of childcare.
- 30 hours free childcare. Working families in England with 3 and 4 year old children can receive 30 hours of free childcare a week.
- 15 hours free childcare. Families in England who have 2 year old children and are on certain benefits can get 15 hours of free childcare a week. All families with children aged 3 and 4 can also access 15 hours of free childcare a week.
- Claim back childcare costs. You may be able to claim back up to 85% of your childcare costs if you’re eligible for Universal Credit, with up to £646 back each month for one child or £1,108 for 2 or more children.
- Apply for free school meals. Free school meals are available to pupils in England if parents get certain benefits.
- Claim Healthy Start vouchers. If you’re more than 10 weeks pregnant or have a child under 4, you may be able to get help to buy healthy food and milk.
- National breakfast clubs. All participating schools will receive a 100% subsidy for breakfast club provision until the end of July 2022.
- Get help with maternity costs. You could claim a one-off payment of £500 to help towards the costs of having a child.
- Housing support:
- Get help with all or part of your rent. You may get help with all or part of your rent. There’s no set amount of housing costs support and what you get will depend on whether you rent privately or from a council or housing association.
- Housing Benefit if you're unemployed or on a low income. Housing Benefit can help you pay your rent if you’re unemployed, on a low income or claiming benefits.
- Support for additional housing costs. You may be able to get support for additional housing costs if you're already claiming Housing Benefit.
- Council Tax support schemes. Councils run support schemes to help people on low incomes with their Council Tax bill.
- Discretionary Housing Payments. If you are on certain benefits you may be eligible for Discretionary Housing Payments which provide financial support to help with rent or housing costs.
- Get help with interest payments on mortgages or loans. If you’re a homeowner on qualifying benefits, you might be able to get help towards interest payments on your mortgage or loans you’ve taken out for certain repairs and improvements to your home.
- 95% mortgages for homes up to £600,000. You may be eligible to borrow up to 95% of the cost of a property worth up to £600,000 thanks to the mortgage guarantee scheme. Contact mortgage providers to see if you're eligible.
- Help with transport costs:
- Slashing fuel duty by 5p for twelve months. Conservative Governments have frozen fuel duty for twelve consecutive years. But in recognition of the unprecedented circumstances pushing up fuel prices, the Government cut fuel duty by 5 pence for a full year – only the second cut in twenty years, the largest ever cut across all fuel duty rates, and a new tax cut itself worth £2.5 billion, adding up to over £5 billion together with the cost of the freeze. This will save car drivers £100, van drivers £200, and HGV drivers £1,500 this year. Furthermore, 40% of the cut will benefit businesses.
- Save a third on rail journeys. You can get up to a third off train fares with a railcard in Great Britain, saving up to £142 a year on average.
- 50% off travel if you're on Universal Credit. You may be eligible for a Jobcentre Plus Travel Discount Card if you're on Universal Credit.
- Bus passes. In England you can get a bus pass for free travel when you reach the State Pension age. If you’re disabled then you may be eligible for a disabled person’s pass if you live in England.
- Help finding work:
- The best way to help with the cost of living is to help people into good jobs. Somebody moving from welfare to full-time work on the NLW is over £6,000 better off. Our Kickstart scheme fully funded over 152,000 jobs for young people at risk of long-term unemployment. The Restart scheme will help 1.4 million long-term unemployed people. The Government has doubled the number of work coaches to 27,000. And the Government is also increasing skills spending by £3.8 billion over this Parliament (26% in real terms) to help people get the jobs they want – skills bootcamps, traineeships, Sector Based Work Academies, apprenticeships, new Institutes of Technology, more post-16 Further Education funding and the PM’s Lifetime Skills Guarantee.
- You can search and apply for jobs across a range of industries across the UK through our Find a job website.
- You can get personalised support, tips and advice to find your next opportunity through JobHelp.
- Extra support for working families. The Flexible Support Fund is available to those on Universal Credit and can help pay for things you need to get into work and progress your career, such as initial childcare costs, training, uniforms and work tools.
A reminder of 16 tax cuts that the Government has introduced during and following the pandemic:
- Increasing the National Insurance personal threshold to £12,570, a £6 billion tax cut for nearly 30 million workers and worth over £330 a year, starting in July
- Slashing fuel duty by 5p, only the second cut in twenty years and saving car drivers £100
- Cutting business rates by 50 per cent this year for 90 per cent of retail, hospitality and leisure businesses
- Reducing the Universal Credit taper rate to 55p, a tax cut for 2 million low-income families worth £1,000
- Introducing a brand new Super Deduction on capital investment for companies – a £25 billion tax cut
- Raising the employment allowance to £5,000, a new £1,000 tax cut for half a million small businesses
- Removing VAT on energy-saving materials, a £250 million tax cut for energy efficiency
- Cutting beer duty by 5p, and freezing all alcohol duties for the third year in a row
- Creating a new half-price rate of Air Passenger Duty for domestic flights within the United Kingdom
- Doubling creative industries tax reliefs for our world-leading theatres, orchestras, museums and galleries
- Creating new business rates reliefs to incentivise improvements and green investment
- Extending the £1 million Annual Investment Allowance for a further 15 months during the pandemic
- Reducing VAT to a temporary 5% rate for retail, hospitality and leisure during the pandemic
- Cutting stamp duty for house sales under £500,000 for a total of fifteen months during the pandemic
- Removing VAT from e-books and e-publications
- The Government will cut income tax by 1p in 2024, the first for 16 years, worth £5 billion for over 30 million workers, savers and pensioners