Second UK Government Cost of Living Payment made

The UK Government made the second Cost of Living Payment of £324 in November 2022, following the first payment of £326 in July 2022¹. The two instalments together made up £650 for people in receipt of means-tested benefits owing to low income¹.

The Cost of Living Payments were paid automatically through existing benefit awards, with no claim required, and did not affect entitlement to benefits or count towards the benefit cap². For people getting Pension Credit, Universal Credit, Income Support, income-related ESA or income-based JSA, the second instalment was paid between 8 and 23 November 2022³. For people getting Child Tax Credit or Working Tax Credit only, the second payment was paid at the end of November 2022², or after 23 November 2022³.

Eligibility for the second instalment depended on entitlement during a qualifying period. For means-tested benefits, a person had to be entitled to a payment, or later found to be entitled to one, of income-based JSA, income-related ESA, Income Support or Pension Credit for any day between 26 August and 25 September 2022². For tax credits, a person had to have received a payment, or an annual award of at least £26, of tax credits on any day between 26 August and 25 September 2022². Couples making a joint claim for a means-tested benefit or for tax credits received one £650 payment between them, paid in two instalments².

Separate support ran alongside the means-tested payments. A lump sum of £150 was paid to anyone in receipt of a qualifying disability benefit on 25 May 2022, including Attendance Allowance, Constant Attendance Allowance, Disability Living Allowance, Personal Independence Payment, and Armed Forces Independence Payment and War Pension Mobility Supplement². People receiving both a means-tested benefit or tax credit and a qualifying disability benefit received the £150 in addition to the £650². From November 2022, anyone entitled to the Winter Fuel Payment for winter 2022 to 2023 received an additional £300 towards the cost of energy².

The Trussell Trust, which supports a network of over 1,400 food bank centres across the UK, reported that the first payment correlated with a dip in need for emergency food parcels in Wales in July 2022, when food banks there distributed 10,500 parcels, against an average of 13,200 in the other five months of the April to September period¹. The charity said the November payment and the Welsh Government's fuel support scheme may have provided some respite, but that this had not been enough to help families manage the cost of living crisis for an extended period¹.

Its August 2022 survey of people in receipt of Universal Credit found that 70% of those who had received the first payment had spent all of it when surveyed, less than a month after receiving it, with 64% of those who had spent some of it using it to buy food, 38% buying basic toiletries and 36% paying off debts or arrears on bills¹.

Why it matters for households

The £324 instalment completed a £650 total for households on means-tested benefits, paid in two parts across five months¹. Because payments were automatic and made separately from benefit payments, recipients did not need to apply². Households that received only Carers Allowance, New-Style or contribution-based JSA, New-Style or contribution-based ESA, Incapacity Benefit or Industrial Injuries Disablement Benefit were not covered by the cost of living support package². The Trussell Trust's evidence describes the pressure those payments were set against: among people in receipt of Universal Credit surveyed in August 2022, 19% across the UK said they faced real financial problems and had fallen behind with bills and credit commitments, and a further 34% said keeping up was a constant struggle; in Wales the figures were 14% and 40%¹. Across the UK, 19% said they were behind on energy bills, 12% on Council Tax, 12% on water bills and 12% on rent or mortgage¹.

What happens next

The Trussell Trust's evidence points to the decision to uprate benefits and raise the benefit cap in line with inflation from April 2023¹. Advice NI notes that from April 2023 support was likely to shift to more targeted help for organisations most in need, and that beginning in 2023 Tax Credits claimants would be required to move their claim to Universal Credit⁴. A further Cost of Living Payment of £900, paid in three instalments of £301, £300 and £299 across 2023 and 2024, is set out in the benefits guidance³.