Cost of Living

Cost of Living

● The Government understands how the rising cost of living is making life harder for people. These are global challenges, however, the Government is providing support worth over £22 billion in 2022-23 to help families with these pressures.

The Government will continue to keep the situation under review, recognising the high level of current uncertainty and continue to monitor the ongoing impact of

Russia’s invasion of Ukraine on the economy. We will be ready to take further steps, if needed, to support households.

● We are boosting the incomes of the lowest paid:

o raising the National Living Wage by 6.6 per cent to £9.50 from April 2022, meaning an extra £1,000 a year for a full-time worker;

o increasing the National Insurance Threshold in July, worth £330 in the year from July for a typical employee – the single largest personal tax cut for a decade; and

o giving 1.7 million families around an extra £1,000 a year, on average, through our cut to the Universal Credit taper rate and increase to the work allowance.

● We are helping families with their energy costs:

o providing a £150 council tax rebate for those in Bands A-D in England from

April and £144 million of discretionary funding for Local Authorities to support households who need support but are not eligible for the Council Tax rebate;

o a £200 reduction in households’ energy bills delivered from October. This helps households smooth out the increased costs of energy bills at a time when they are particularly high, with the costs of the reduction spread as widely as possible so that no household pays more than £40 per year through the levy.

o on top of this, we are providing a £150 rebate on the energy bills of three million low-income households from October through the Warm Home

Discount;

o providing seasonal cold weather payments of an extra £25 a week for up to four million people during sustained cold periods; and

o giving up to £300 in Winter Fuel Payments to people of State Pension age.

● We are supporting people with household bills:

o we have cut fuel duty by 5p for 12 months, saving drivers an average of £100 a year – having already frozen it for twelve consecutive years;

o we have doubled the value of the Household Support Fund to £1 billion, helping local authorities support those on the lowest incomes with their food and utility costs;

o investing £200 million a year to continue the Holiday Activities and Food

Programme – which benefited over 600,000 children last summer;

o increased the value of the Healthy Start Vouchers by a third to £4.25 a week; and

o we have doubled free childcare to 30 hours since 2010, worth £5,000 per child per year for the parents of the 330,000 registered children.

● And we are helping with the cost of housing:

o maintaining the increase to Local Housing Allowance in cash terms – an intervention that was worth an extra £600 on average to 1.5 million households in 2020-21; and

o provided £670 million to help local authorities support households struggling with council tax bills.

● Government decisions since Spending Round 2019 will have benefitted the lowest-income households the most, as a proportion of income. Our modelling also shows that:

o the lowest-income 60 per cent of households receive more in public spending than they contribute in tax;

o households in the lowest income decile will receive more than £4 in public spending for every £1 they pay in tax, on average; and

o the impact of Government policy since the 2019 Spending Round on the lowest-income 40 per cent of households is expected to be worth more than £1,000 a year on average, while there will have been a net benefit on average for the poorest 80 per cent of households.