Cost of Living Support Package: How Will It Impact You?

The Eco Experts

Global energy prices are increasing at a rapid rate.

UK energy regulator Ofgem estimates most people will have to pay around £800 more for gas and electricity from October 2022 – this is on top of the 54% energy-price-cap increase, which was put in place in April 2022.

Welfare charities and experts have said these prices will push millions of people into fuel poverty.

After mounting pressure from political parties, charities, and the general public, the government has decided to step in by releasing a financial support package – but is it enough?

Figuring out energy bill prices next to smart meter

Government financial support during the energy crisis

Over the course of 2022, the government has discussed a few different ways it could financially support people during the energy crisis

In April, Chancellor Rishi Sunak announced a £150 council tax rebate.

Sunak also proposed the idea of introducing a £200 loan, which would help households afford bills, but would mean they’d eventually have to pay it back through higher bills in the future. This idea has since been scrapped, after wide criticism.

Instead, Sunak has introduced a new financial support package, which will be worth double the amount of the loan, at £400, and won’t have to be paid back.

This £15-billion package has been funded by a windfall tax – also known as the temporary Energy Profits Levy – on oil and gas giants.

What’s included in the Cost of Living Support package?

The government’s new Cost of Living Support package is available for all UK households, and also offers additional support for vulnerable groups.

Want to see how much support your household will receive? We’ve outlined everything you need to know about the Cost of Living Support package below.

Support for all UK households

As part of the new Cost of Living Support package, all households in England, Scotland, and Wales will receive £400 to help them afford rising energy bills. As it stands, people in Northern Ireland need to wait before they find out whether they’ll receive the payment.

Unlike the Chancellor’s original plan, this £400 payment will be as a grant, which means households won’t have to pay it back through higher bills in the future.

The payment will be delivered over the course of six months – starting in October. Direct debit and credit customers will have the money credited to their accounts. Customers with pre-payment meters, on the other hand, will have the money applied to their meter or paid through a voucher.

Support for low-income households

As well as receiving the standard £400 grant, low-income people will be able to get a one-off £650 payment.

Anyone with one of the following means-tested benefits will be eligible for the grant:

  • Universal Credit
  • Income-based Jobseekers Allowance
  • Income-related Employment and Support Allowance
  • Income Support
  • Working Tax Credit
  • Child Tax Credit
  • Pension Credit

If you’ve applied for one of these benefits before 25th May 2022, and it gets approved further down the line, you’ll also qualify for the grant.

The Department for Work and Pensions (DWP) will make the payment in two lump sums – the first from July, and the second one “in the autumn”.

Support for pensioners

As well as receiving the standard £400 grant, UK pensioners will be able to get a one-off £300 payment.

Anyone who’s the state pension age of 66 or above (as of 19–25 September 2022) will be eligible for the payment – amounting to almost 8 million pensioners across the UK.

This Pensioner Cost of Living Payment will act as a top-up to your annual Winter Fuel Payment in November and December.

Support for disabled households

To help people with disabilities afford specialist equipment, specific food, and increased transport costs, the government is offering a £150 Disability Cost of Living Payment, which will be an add-on to the standard £400 grant.

Anyone receiving the following disability benefits will be eligible for the one-off payment:

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

The government is also keen to point out that many disability benefit recipients will also receive the £650 grant.

Cost of Living Support package summary

All UK households – £400

Lowest income households – £650

Pensioners – £300

Disabled households – £150

Why is the government offering financial support?

The recent energy crisis is pushing millions of people into fuel poverty – and it’s only set to get worse.

The 12-month inflation rates for gas and electricity are at their highest level since early 2009 – with gas at 28.1% and electricity at 18.8%.

Ofgem has also said the typical household energy bill is set to rise by £800 in October – bringing the energy price cap to £2,800 a year – up from £1,126 in 2020.

These sky-high energy prices also have a knock-on effect on the cost of food and other goods, which have pushed general inflation rates to a 40-year high.

The reasons behind all of this? It comes down to the war in Ukraine, recent lockdowns in China, and the post-pandemic recovery.

Is the Cost of Living Support package enough?

While some people are happy with this package, others still have a bone to pick with Sunak.

Like many people around the country, the director of the Institute for Fiscal Studies, Paul Johnson, said the support was a “genuinely big package”.

However, many people have criticised the Chancellor for giving this grant to everyone – even the top earners in the UK. Naga Munchetty from BBC Breakfast asked Sunak: “Does it feel right to you that someone in your financial position receives a £400 grant, or someone with a second home receives two lots of £400 grants?”

Many environmental charities have also voiced their concerns over the new grant system.

Ami McCarthy, a political campaigner for Greenpeace UK, stated: “While providing support to millions struggling with sky-high energy bills is 100% the right thing to do, by only skimming the top 25% off oil and gas company profits, Sunak has missed a huge opportunity to tackle the root cause of the cost of living crisis and the climate crisis together.”

Although a windfall tax has been implemented on gas and oil giants, there hasn’t been enough support to fix the source of the problem: the UK’s leaky homes and its reliance on fossil fuels.

As Mike Childs, head of policy at Friends of the Earth, puts it: “Green power and energy efficiency are the real solutions.”

Summary

After a slew of disappointing government announcements – including minimal financial help and proposed loans – the Cost of Living Support package has mostly been welcomed with open arms.

However, there are still lingering questions.

The grant is excellent news, but energy prices will only continue to worsen until we move away from fossil fuels and ramp up renewable energy in the UK. There’s only a limited amount of oil and gas to rely on – the later we leave it, the pricier it’ll become.

Beth Howell Senior Writer

Beth has a real passion for green living. She’s been absorbed in eco research for over three years, and has become quite the expert. Whether you’re after a new set of solar panels, a home energy improvement, or you want to catch the latest eco news, she’s got your back.

Back to Top