Cost of Living Support
This briefing provides an updated introduction to the support provided by the government to address the cost of living crisis, sharing as much information as is currently available
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We also emphasise the somewhat more complex situation for households in Northern Ireland and call on the government both in Westminster and at Stormont to provide further clarity on the extent of financial assistance that will be provided here. Contact details for services offering advice and guidance to members of the public to help them deal with the impact of the cost of living crisis are at the end of the document.
Background
The Institute for Government defines the cost of living crisis as the fall in disposable incomes due to rising inflation, largely driven by the substantial increase in energy costs, particularly the wholesale price of gas. This is being driven principally by the economic disruption caused by coronavirus and the Russian invasion of Ukraine, which has had a major impact on energy prices.
The most noticeable price increases are in the cost of energy, fuel and groceries. In February, the British energy regulator, Ofgem, announced a 54% increase in the energy price cap in February 2022. In Northern Ireland, the Utility Regulator monitors tariffs and has sanctioned a number of increases in recent months. Meanwhile, the average price of both petrol and diesel are at their highest ever recorded, with a 12-month inflation rate of approximately 42.3%. ONS figures also show that the cost of food and non-alcoholic beverages has risen by 9.8%, with some suggesting that inflation may be even higher in low-cost foodstuffs, prompting the ONS to conduct experimental research in this area.
In response primarily to rising energy costs, on 3 February 2022 the Chancellor announced an Energy Bills Rebate, providing all domestic electricity customers £200 off their energy bills in October 2022, as well as a Council Tax rebate of £150 for those in bands A-D (approximately 80% of households). The proposals were widely criticised as being inadequate, particularly in view of the fact that the Energy Bills Rebate would be automatically recovered in five yearly instalments.8 Yet despite criticism, the Chancellor made no major changes to the proposed measures in his Spring Statement, rather focusing on tax cuts as a means to combat the impact of inflation, with increases to National Insurance thresholds and a reduction in fuel duty.
Whilst National Insurance and duty changes will benefit Northern Irish taxpayers, neither of the rebates announced by the Chancellor would be available to households here, with equivalent funding being passed through to the Executive through the Barnett formula. Some support was already being provided to low income households through the Energy Payment Support Scheme and the Emergency Fuel Payment Scheme, but further measures were not agreed prior to the collapse of the Executive and subsequent Assembly election on 5 May 2022, which has so far failed to produce a resolution to the political impasse.
May Measures: Cost of Living Support
In light of the growing pressure outlined above, Rishi Sunak addressed the House of Commons on 26 May 2022 and announced measures designed to mitigate the impact of inflation on households, which at the time was predicted by the Bank of England to reach 10%. The measures amounted to a windfall tax on profits in the oil and gas sector (the Energy Profits Levy) used to fund a £15bn package of financial support to UK households to mitigate the rising cost of living.
The cost of living support announced on 26 May goes substantially further than the rebates announced in February. Those on low incomes or whose energy use is greater will receive the highest rate of support, up to £1,500 in the case of some pensioners, while all households will receive at least £400 off their electricity. Taken alongside other measures announced by the Chancellor in his Spring Statement and Autumn Budget and Spending Review, the Treasury claimed that working single parents will receive a total of £2,500 in additional support and low-to-middle income working families could receive as much as £4,200.
Energy Bills Support Scheme
The Energy Bills Rebate announced in February is overhauled and rebranded as an Energy Bills Support Scheme. Rather than a rebate of £200 that has to be repaid down the line, households will now receive a £400 grant to reduce their electricity costs:
- Credited to bills and smart meters by suppliers in 6 monthly instalments starting in October 2022.
- Prepayment customers will be issued a voucher.
- Customers need to ensure their details are up-to-date with their supplier, and contact the supplier if the credit is not applied.
- Delivery in Northern Ireland still needs to be clarified (detailed discussion below).
Means-tested Cost of Living Payment
Those on most means-tested benefits to receive an additional one-off cost of living payment of £650, made in two instalments in July and November 2022:
- Must be entitled to a payment of at least 1p from one of the following qualifying benefits during the qualifying period:
- Universal Credit
- Income-based Jobseekers Allowance
- Income-related Employment and Support Allowance
- Income Support
- Pension Credit
- Child and Working Tax Credit claimants are also eligible for these payments, but they will be made later to prevent duplication for those also in receipt of another qualifying benefit.
- Two qualifying periods apply in respect of each instalment. The first ran from 26 April 2022 to 25 May 2022, while the second will be from 26 August 2022 to 25 September 2022.
- Only one payment will be made per household.
- Payments will only be made in respect of one benefit, so those in receipt of more than one qualifying payment (e.g. Child Tax Credit and Working Tax Credit or income-related Employment and Support Allowance and Child Tax Credit) will only get one payment.
- Payments will be issued by the relevant benefit paying office, who can be contacted if an expected payment has not been received.
- Payments will be tax-free and will not have any impact on existing benefit awards.
Disability Cost of Living Payment
Anyone in receipt of certain disability benefits will also receive a separate one-off payment amounting to £150 from 20 September 2022:
- Must be entitled to a payment of any of the following as of 25 May 2022:
- Disability Living Allowance
- Personal Independence Payment
- Attendance Allowance
- Constant Attendance Allowance
- Armed Forces Independence Payment
- War Pension Mobility Supplement
- Adult or Child Disability Payment in Scotland
- Payments will be made ‘to each individual’ who is entitled, including children in receipt of Disability Living Allowance
- Payments will be issued by the relevant benefit paying office.
- This payment will also be exempt from tax and consideration as income under existing benefit awards.
Pensioner Cost of Living Payment
A further payment of £300 will be made to pensioners in recognition of the greater impact rising energy costs have on the elderly:
- One-off payment will be added to the existing Winter Fuel Payment as a top-up in November or December 2022.
- Must be over State Pension age between 19 and 25 September 2022, with certain exceptions.
- The Winter Fuel Payment (including the extra Pensioner Cost of Living Payment) is not taxable and does not affect eligibility for other benefits.
Reactions to the announcement were broadly positive, with many recognising that these measures were a substantial improvement on the support that the Chancellor had announced previously. However, substantial concerns have been raised about the short-term nature of the support and the economic choices made by the Chancellor.
September Scramble: Restricting Energy Costs
Despite the measures introduced by the government in May, further inflation, especially with regard to energy costs, was likely to leave low income households in serious financial difficulty as the crisis progressed. Evidence from the Resolution Foundation was used to show how the projected increases would outstrip the levels of support made available.[1] As a result, campaigners and pressure groups repeated calls for further government intervention to address the problem.
The prospect of further action was substantially delayed by the fall of Prime Minister Boris Johnson and the resulting Conservative Party leadership election. However, Ofgem’s confirmation on 26 August that the energy price cap would increase to £3,549 per year from 1 October made another intervention inevitable. Both of the leading candidates, the former Chancellor, Rishi Sunak, and the Foreign Secretary, Liz Truss, ultimately committed to providing further support, albeit without any substantial detail However, following her election as leader of the Conservatives and appointment as the new Prime Minister, on 8 September 2022 Liz Truss announced ‘extraordinary measures’ to the House of Commons.
Energy Price Guarantee
These measures were centred around an Energy Price Guarantee for household bills, which would override the tariff limits set by the regulators:
- Caps household energy bills at £2,500 until 2024 by limiting the unit price of both electricity and gas.
- Fixed average unit prices of 34.0p/kWh for electricity and 10.3p/kWh for gas, inclusive of VAT.
- Additional payment of £100 for those without gas heating, such as home heating oil customers.
- Households will continue to benefit from the Energy Bills Support Scheme and Cost of Living payments announced in May.
Energy Bills Relief Scheme
Truss also promised equivalent support for ‘businesses, charities and public sector organisations’. This was formally announced by the new Secretary of State for Business, Energy and Industrial Strategy, Jacob Rees-Mogg, as the Energy Bill Relief Scheme.
- Universal support for 6 months, with targeted support for ‘vulnerable sectors’ beyond that time-frame.
- Applies to fixed contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts.
- Support will automatically be applied to bills as a discount by suppliers.
- Establishes a Supported Wholesale Price, predicted to be £211 per MWh for electricity and £75 per MWh for gas.
- Equivalent support will also be provided for non-domestic consumers who use heating oil or alternative fuels instead of gas.
Chancellor’s Growth Plan
More information about how this support would be delivered was revealed to Parliament by the new Chancellor, Kwasi Kwarteng, on Friday 23 September. His Growth Plan confirmed the earlier announcements about the Energy Price Guarantee from the Prime Minister and the Business Secretary, but as part of a larger ‘mini budget’ focused primarily on tax cuts:
- Basic rate of income tax to be reduced to 19% from April 2023.
- Health and Social Care Levy and associated National Insurance increase scrapped.
- Universal Credit claimants earning less than the equivalent of 15 hours per week at National Minimum Wage to be required to undertake more intensive work search.
Whilst the announcements appeared to address the energy crisis directly, and the new Prime Minister sought to focus on this aspect of the Growth Plan in her media appearances, the reaction of the financial institutions and markets to the planned tax cuts and expected increase in government borrowing was poor. In the week following the Chancellor’s speech, we have seen a significant impact on the national economy. First, the pound fell to an all-time low against the US dollar. This prompted the Bank of England to declare it would not hesitate to raise interest rates further if necessary. In response, a number of lenders withdrew mortgage deals, sparking fear amongst home-owners about a substantial increase in costs.
As a consequence, it is difficult to predict whether the current position will be the peak of inflationary pressures or whether more rises are ahead during what will undoubtedly be a difficult winter for many. Analysis from Policy in Practice makes the important point that the Energy Price Guarantee is not an absolute limit on costs for households, and that large households and particularly energy inefficient households will still be paying much more than £2,500 per year.
Prospects for Northern Ireland
Analysis of the impact of the announcements made by the Chancellor on households in Northern Ireland depends on which aspect of the measures are considered.
Cost of Living Payments
In the case of the cost of living payments announced for the most vulnerable, the Treasury briefing makes it clear that these are UK-wide payments available to all those eligible regardless of where in the UK they live. Further detail for Northern Ireland residents is available at nidirect. The first instalment of payments to those on relevant means-tested benefits were issued by the Department for Communities from 20 July, while Tax Credits recipients were issued their payment in September. In addition, those on disability benefits should have received the separate disability payment by early October, if they have not already. Anyone who has not received these payments would be advised to contact the relevant benefit paying office to enquire.
The Department for Communities have now confirmed that the second instalment of the low income payment will be issued to those eligible between 8 and 23 November 2022. Support for pensioners will be provided as part of the Winter Fuel Payment, but anyone unsure about whether they will be eligible should seek independent advice.35
Energy Bills Support Scheme
On the other hand, the universal assistance provided through the Energy Bills Support Scheme cannot be passed on to Northern Ireland households in the same way. Rishi Sunak suggested when announcing the scheme that he would be open to legislative action to ensure that this assistance was extended to Northern Ireland, and the Stormont Finance Minister committed to supporting the Treasury in this respect, but details have been slow to emerge.
We know that £164.8 million has already been passed to Stormont by the Treasury in relation to the original Energy Bills Rebate scheme. As such, there will undoubtedly be a good deal of administrative activity required to apply that and the further sum still held by the Treasury in respect of the improved Energy Bills Support Scheme to household electricity bills and meters. Sunak’s replacement as Chancellor, Nadim Zahawi, established a ‘joint taskforce’ to establish a mechanism for delivering this support. Following a subsequent meeting of the taskforce on 26 August, Conor Murphy confirmed that the support would be delivered from Westminster rather than Stormont, but noted that a clear time-frame was yet to be established.
Following the announcement of the Energy Price Guarantee, the new Westminster administration have also committed to resolving delivery of the Energy Bills Support Scheme to households in Northern Ireland.40 In her recent interview with BBC NI, the Prime Minister suggested that this would start from November, backdated to align with process in Britain, although it is clear that there is still administrative work to be done.
The same also applies to the additional £100 promised to home heating oil users, with no clarification about how those eligible will be identified or the support provided. Indeed, both the Stormont Economy and Finance ministers have been highly critical of this particular feature of the latest announcements.
Energy Price Guarantee
Based on the announcements made by the Prime Minister and senior cabinet members, the Price Guarantee will be delivered for households in Northern Ireland directly from Westminster. Official guidance states that, while the administration will be different, owing to ‘the different way the electricity and gas markets operate’ here, that households will see no difference, with the unit price of both electricity and gas being fixed at the same rates as those outlined above in relation to the rest of the UK. In other words, the management of these measures will be a matter for the government in cooperation with suppliers, perhaps with some support from the Utility Regulator.
Other Funding
The Finance Minister made reference in his earlier statements to a sum of £435m ‘which cannot be allocated to help families, workers and businesses with the cost of living and to support public services’. Aside from the £164.8 million allocated under the Energy Bills Rebate, the minister informed us that £100.1 million is a Barnett consequential related to the Council Tax Rebate in England and £27.8 million for the increase to the Household Support Fund, both of which we might expect an Executive to direct towards addressing the cost of living crisis. In other words, additional funding is available for households in Northern Ireland, but uncertainty remains about how this money might be used.
This also leaves a further sum of £142.3 million available to the Executive, in addition to the wider budget that must be agreed following the most recent election.[3] Clearly action is required to provide more support to households in Northern Ireland, many of whom are facing difficult decisions about how to balance their bills. However, if a resolution can be found to the political crisis this could open opportunities for some more creative approaches to the rising cost of living from the Stormont government.
In conclusion, for the vast majority of our clients – those on means-tested benefits, those with disabilities, and pensioners – welcome financial assistance, albeit temporary, is now being provided. Others not falling into one of those categories will benefit from the action being taken to limit energy bills, hopefully sooner rather than later. Until that happens, the best advice we can offer is to make the most of the range of energy efficiency and cost-saving advice available to consumers and to seek independent advice if they find themselves struggling to manage their bills.
Advice Services
Energy Efficiency and Cost Saving Advice
|
Agency |
Scheme |
Support available |
|
Bryson Energy |
Advice on energy efficiency, heating controls, fuel bills and switching and budgeting and debt |
|
|
Consumer Council |
Efficiency advice, home heating oil survey, price comparison tools |
|
|
Energy Savings Trust |
Advice and funding pages on reducing carbon emissions and saving money |
|
|
Energy Savings Trust |
Range of energy efficiency funding schemes, mostly available to vulnerable customers |
|
|
Housing Executive |
Efficiency advice, grants, oil buying clubs, switching information |
|
|
National Energy Action |
Multi-lingual information leaflets aimed at frontline workers to help provide advice in the communities |
|
|
nidirect |
Information on billing, energy efficiency and grants |
Independent Advice Services
Note: Generalist advice services cover a wide range of welfare rights issues, including but not limited to benefits, consumer matters, debt, employment, housing and immigration.
Regional
|
Organisation |
Type of Advice |
Contact number |
Email/Online contact |
|
Benefits Debt Immigration Tax |
0800 915 4604 |
||
|
Disability |
028 9029 7880 (Belfast) 028 7136 0811 (Derry/Londonderry) 028 8775 2372 (Dungannon) 028 9336 9367 (Carrickfergus) |
||
|
Benefits Family |
0800 028 3008 |
||
|
Benefits Housing |
028 9024 5640 |
||
|
Benefits Criminal Justice Family |
028 9032 0157 (Belfast) 028 7127 1459 (Derry/Londonderry) 028 3833 1168 (Portadown) |
||
|
Farming |
0800 138 1678 |
||
|
Benefits Legacy Mental Health |
028 3751 1599 (Armagh) 028 2766 9900 (Ballymoney) 028 9077 9922 (Belfast) 028 7126 6655 (Derry/Londonderry) 028 8225 2522 (Omagh) |
Antrim & Newtownabbey
|
Organisation |
Type of Advice |
Contact number |
Email/Online contact |
|
Community Advice Antrim & Newtownabbey |
General |
028 9590 6505 |
Ards and North Down
|
Organisation |
Type of Advice |
Contact number |
Email/Online contact |
|
Community Advice Ards & North Down |
General |
0300 123 9287 |
N/A |
Armagh, Banbridge & Craigavon
|
Organisation |
Type of Advice |
Contact number |
Email/Online contact |
|
Community Advice Armagh |
General |
028 3752 4041 |
N/A |
|
Community Advice Banbridge |
General |
028 4062 2201 |
N/A |
|
Community Advice Craigavon |
General |
028 3836 1181 |
enquiry@advicecraigavon.com |
Belfast
|
Organisation |
Type of Advice |
Contact number |
Email/Online contact |
|
General |
0300 1233 233 |
||
|
Ardoyne Association |
General |
028 9071 5165 |
info@ardoyneassociation.org |
|
General |
028 9049 1161 |
reception@bcda.net |
|
|
Ballysillan Community Forum |
General |
028 9039 1272 |
N/A |
|
Benefits Employment |
028 9096 1111 |
||
|
General |
028 9073 5690 |
advice@ebiac.org |
|
|
Falls Community Council |
General |
028 9020 2030 |
info@fallscouncil.com |
|
Neighbourhood Development Association |
General |
028 9058 4848 |
nda@gmx.co.uk |
|
South City Resource & Development Centre |
General |
028 9050 4848 |
N/A |
|
General |
028 9024 8509 |
info@scaltd.net |
|
|
General |
028 9074 6665 |
||
|
Upper Springfield Advice Services |
General |
028 9590 8668 |
welfareadvice@usdt.co.uk |
|
General |
028 9035 1020 |
info@vinecentre.org |
Causeway Coast & Glens
|
Organisation |
Type of Advice |
Contact number |
Email/Online contact |
|
Community Advice Causeway |
General |
028 7034 4817 |
advice@advicecauseway.com |
Derry & Strabane
|
Organisation |
Type of Advice |
Contact number |
Email/Online contact |
|
General |
0300 303 3650 |
||
|
General |
028 7126 9327 |
contact@dovehousecommunitytrust.org |
|
|
General |
028 7135 2832 |
info@resourcecentrederry.com |
Fermanagh & Omagh
|
Organisation |
Type of Advice |
Contact number |
Email/Online contact |
|
General |
07394 921753 |
bmaguire @communityadvicefermanagh.com |
|
|
Omagh Independent Advice Services |
General |
028 8224 3252 |
info@oias.co.uk |
Lisburn & Castlereagh
|
Organisation |
Type of Advice |
Contact number |
Email/Online contact |
|
General |
028 9266 2251 |
Mid & East Antrim
|
Organisation |
Type of Advice |
Contact number |
Email/Online contact |
|
General |
028 9600 1333 |
N/A |
Mid Ulster
|
Organisation |
Type of Advice |
Contact number |
Email/Online contact |
|
General |
028 8775 0211 (Dungannon) 028 7963 3079 (Magherafelt) 028 8676 1875 (Cookstown) |
info@stepni.org |
Newry, Mourne & Down
|
Organisation |
Type of Advice |
Contact number |
Email/Online contact |
|
General |
0300 3030 306 |
See website for referral form |