Committee publishes Cost of living support payments report

The Work and Pensions Committee published its First Report of Session 2023-24, Cost of living support payments (HC 143), on 14 November 2023¹. The Government Response was received on 12 January 2024 and published on 25 January 2024¹.

The response sets out the payments made under the second round of means-tested Cost of Living Payments, announced by the Chancellor on 17 November 2022, worth up to £900 and made in three instalments¹. The first payment of £301 was made between 25 April and 17 May 2023, the second of £300 between 31 October and 19 November 2023, and the third of £299 is to be paid by spring 2024¹. The first round, in 2022, went to over 8 million households on Universal Credit, Pension Credit and eligible legacy benefits¹. Around 6 million people received a £150 Disability Cost of Living Payment, and over 8 million pensioner households received £300 as a top up to their Winter Fuel Payment¹.

The Government said support to households with the high cost of living is worth £104 billion over 2022/23 to 2024/25¹. It said it had made over 30 million separate payments for 2022/23 and a further 23 million so far for 2023/24¹. On eligibility, it said a claimant must be entitled to at least 1p of a qualifying social security benefit with respect to the qualifying period to receive a Cost of Living Payment¹.

The Committee raised concerns about the "cliff edge" nature of the payments, where a person earning just over the qualifying threshold, or in receipt of a sanction, or not receiving an eligible payment during the qualifying period, can miss out¹. The Government said it recognised there are instances where a person may just miss out, and that delivering the payment in three instalments over 2023/24 reduces the chance of someone missing out altogether¹. It declined to change eligibility for the final 2023/24 payment so that Universal Credit claimants with a nil award in the qualifying period, but a payment in the previous and subsequent assessment period, would qualify, saying substantial changes would introduce complexity and risk delays or fraud and error¹. It said 85% of those who received no Universal Credit award during the qualifying period for the first 2022 payment of £326 had no award solely due to earnings¹.

On rates, the response states that state pension and benefit rates rose by 10.1% in April 2023 in line with prices growth¹. From April 2024, subject to Parliamentary approval, most benefit rates will rise by 6.7% in line with prices growth, and relevant State Pension and Pension Credit rates by 8.5% in line with earnings growth¹.

Why it matters for households

The report and response concern the means-tested Cost of Living Payments paid in 2022/23 and 2023/24, the £150 disability payment and the £300 pensioner top up to Winter Fuel Payment¹. The third means-tested payment of £299 is due by spring 2024¹. Households whose Universal Credit award fell to nil in a qualifying period, for example because of earnings, arrears or a lump sum, were not eligible for that instalment; the Government said it would not change the rules for the final 2023/24 payment¹. The response also notes that the £842 million extension of the Household Support Fund runs until March 2024, and that guidance for the fund in England asks local authorities to consider supporting those who have missed out on other recent support such as Cost of Living Payments¹. Benefit and pension rates for 2024/25 are set out as 6.7% and 8.5% increases respectively, subject to Parliamentary approval¹.

What happens next

The third Cost of Living Payment of £299 is to be paid by spring 2024¹. The April 2024 rate increases are subject to Parliamentary approval¹. An evaluation of the Cost of Living Payments is underway, which the Government says will seek to understand their effectiveness as a means of support for low-income and vulnerable households¹.