The Chancellors’ Cost of Living statement: what you need to know

On 26 May 2022 the Chancellor Rishi Sunak announced that the government would be making one-off cash payments to certain people to help with the cost of living crisis. These are as follows:

Members in receipt of DWP and HMRC means-tested benefits

£650 to those in receipt of universal credit, income-based jobseeker's allowance, income-related employment and support allowance, income support, working tax credit, child tax credit or pension credit.

Important detail

  • You will need to have been in receipt of the above social security payments as of 25 May 2022 or have begun a claim which is later successful.
  • Joint claimants receive the same amount as single claimants (£650).
  • The DWP payment will be made in two lump sums (£325 x 2); the first in July 2022 and the second in autumn 2022. Exact dates are not yet known.
  • The HMRC payment will be made in two lump sums (£325 x 2); the first in autumn 2022 and the second in winter 2022. Exact dates are not yet known.
  • The government has yet to announce the date on which you need to have been entitled to one of the qualifying benefits in order to get the second payment.
  • The payment is tax-free and will be paid in addition to any other state support you receive.

Members who receive disability related social security

£150 to those in receipt of disability living allowance, personal independence payment, attendance allowance, Scottish disability benefits, armed forces independence payment, constant attendance allowance or war pension mobility supplement.

Important detail

  • You will need to have been in receipt of the above social security payments as of 25May 2022or have begun a claim which is later successful.
  • If you are also in receipt of a means-tested benefit (see above), the £150 payment is made in addition to the £650 payment.
  • It will be paid from September 2022.
  • The payment is tax-free and will be paid in addition to any other state support you receive.

Members aged 66 or over between 19-25 September 2022

£300 to all pensioner households who get the annual winter fuel payment as a top-up to the usual winter fuel payment. Check if you are in the small group who need to make a claim for a winter fuel payment on the gov.uk website.

Important detail

  • It will be paid in November/December 2022.
  • It is tax-free and will be paid in addition to any other state support you receive.

Everyone else

A £400 Energy Bills Support Scheme payment which will be paid as a grant and not recovered. This replaces the £200 support announced on 3 February 2022.

Important detail

  • These payments will be paid directly to your energy supplier, in instalments over six months from October 2022.
  • Direct debit and credit customers will have the money credited to their account.
  • Customers with pre-payment meters will have the money applied to their meter or paid via a voucher.

Key things you need to know

Do I need to apply?

You do not need to apply; if you are eligible, you will be paid automatically. The only exception is the winter fuel payment – check the gov.uk website if you are in the small group who need to make a special claim.

Do the payments apply to everyone in the UK?

This support or the equivalent will be paid throughout the UK: England, Wales, Scotland and Northern Ireland.

Are these payments enough?

The level of social security and state pension payments are reviewed by government every year and uprated in April. The rate of inflation that the increase is based on is usually the Consumer Prices Index (CPI) - a measure of inflation based on price on an average market basket of consumer goods and services from the September preceding the financial year.

In his Cost of Living statement the Chancellor said that, ‘subject to the Secretary of State’s review’ social security payments in April 2023 will be uprated by this September’s CPI ‘which, on current forecasts, is likely to be significantly higher than the forecast inflation rate for next year.’
It should be noted that between 2016-2020 there was a four-year freeze on uprating for most working age social security and tax credits. This means that social security value remained the same as it had been in 2015 rather than rising with inflation.

In addition, the cost of living payments will not help those who are subject to social security restrictions such as the two child limit and benefit cap, as well as the minimum income floor, which particularly negatively impacts on self-employed entertainers.

Finally, the £400 Energy Bills Support Scheme payment grant falls a long way short of the average household increase in energy bills when April and October fuel price increases are added together.

How could the government help more?

Equity welcomes the continued use of Consumer Prices Index to help people meet rising costs. However, along with many other groups, we would like to see the government make a commitment to ensure that social security rates reflect the actual cost of living on an ongoing basis and that Universal Credit works for self-employed people. See Equity responds to Government measures to tackle cost of living.

What can I do?

We encourage you to join us at the Cost of Living Crisis Demo on Saturday 18th June.

You can also contact your MP – see our guide to lobbying your MP here.

Equity members can check whether they are in receipt of all of the social security they are entitled to by contacting Equity’s Tax and Welfare Rights helpline. The helpline is open on Mondays and Thursdays, from 10am-1pm and 2-5pm; 0207 670 0223 or email helpline@equity.org.uk. For more information see our Tax and Welfare section.