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Millions of most vulnerable households will receive £1,200 of help with cost of living




Millions of households across the UK will benefit from a new £15 billion package of targeted government support to help with the rising cost of living, the Chancellor announced today (26 May).


  • Almost all of the eight million most vulnerable households across the UK will receive support of at least £1,200 this year, including a new one-off £650 cost of living payment

  • Universal support increases to £400, as the October discount on energy bills is doubled and the requirement to repay it over five years is scrapped

  • This new [£15 billion] support package is targeted towards millions of low-income households and brings the total cost of living support to £37 billion this year

  • New temporary Energy Profits Levy on oil and gas firms will raise around £5 billion over the next year to help with cost of living, with a new investment allowance to encourage firms to invest in oil and gas extraction in the UK



The significant intervention includes a new, one-off £650 payment to more than 8 million 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 that many families received last month – equal to the average energy price cap rise over this year.



To ensure there is support for everyone who needs it, 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. This balanced approach allows the government to deliver support to families, while encouraging investment and growth.



The Chancellor of the Exchequer Rishi Sunak said:


”We know that people are facing challenges with the cost of living and that is why today I’m stepping in with further support to help with rising energy bills.

“We have a collective responsibility to help those who are paying the highest price for the high inflation we face. That is why I’m targeting this significant support to millions of the most vulnerable people in our society. I said we would stand by people and that is what this support does today.

“It is also right that those companies making extraordinary profits on the back of record global oil and gas prices contribute towards this. That is why I’m introducing a temporary Energy Profits Levy to help pay for this unprecedented support in a way that promotes investment.”


There is now more certainty that households will need further support, with inflation having risen faster than forecast and Ofgem expecting a further rise in the energy price cap in October.


Today’s announcement is on top of the government’s existing £22 billion cost of living support which includes February’s energy bills intervention and action taken at this year’s Spring Statement including a £330 tax cut for millions of workers through the NICs threshold increase in July and 5p cut to fuel duty.



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 for households in England, Scotland, and Wales. It is GB-wide and we will deliver equivalent support 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.


£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.

  • Legislation will be introduced shortly to allow payments to be made to this timetable.


One-off £300 Pensioner Cost of Living Paymen


  • 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.

  • So 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 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 (England only)


Energy Profits Levy


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


In order both to fairly tax the extraordinary profits and encourage investment, the Chancellor announced a temporary new Energy Profits Levy with a generous 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, similar in style to the super-deduction, 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 government expects the combination of the Levy and the new investment allowance to lead to an overall increase in investment, and the Office for Budget Responsibility (OBR) will take account of this policy in their next forecast.


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.


As set out in the Energy Security Strategy the government is consulting with the power generation sector and investors to drive forward energy market reforms and ensure that the price paid for electricity is more reflective of the costs of production.


The Chancellor announced today that the Treasury will urgently evaluate the scale of these extraordinary profits and the appropriate steps to take.


During the announcement, the Chancellor also set out the government’s strategy to control inflation through independent monetary policy, fiscal responsibility, and supply side activism – a plan he said that should see inflation come down and returning to its target over time.


  • The majority of these measures will apply UK-wide except the Household Support Fund, which is England only. The Devolved Governments will receive Barnett funding as a result of this measure. The Energy Bill Support Scheme is only in Great Britain but Government will deliver equivalent support to people in Northern Ireland.

  • These new cost of living payments will be paid directly to households across the UK by the UK Government.

  • In the absence of a functioning Executive in Northern Ireland, the UK Government is taking decisive action to support the people of Northern Ireland through these measures.



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