Following increased cost of living pressures due to energy price rises and high inflation, the Government issued a further package of cost of living support measures in 2023/24 to protect the most vulnerable against rising costs. These measures included a series of cost of living support payments for those in receipt of certain benefits. These payments followed the issuing of similar payments in 2022/23.
Our report builds on the work we have done previously and published in our July 2022 report on the cost of living. While that report looked more generally at various Government measures to try and help households with the rising cost of living, this report specifically examines the effectiveness of these payments in 2022/23 and 2023/24 in supporting the most vulnerable. In doing this we also build on the work of our fellow House of Commons Committee, the Treasury Committee, and its December 2022 report on cost of living payments.
We explore how the payment system worked, eligibility and access for the payments, and alternative support if a recipient was not eligible for the payments. We also look at the impact and limitations of the payments for those who received them, and how the support compared to similar international systems of support. This inquiry specifically looked at the additional payments given to those who receive benefits and not support that was available to everyone, such as the energy price guarantee.
We welcome the automated nature of the payments which removed a barrier to access for many and enabled the swift issue of cash support for those in need. However, we are concerned by the cliff edge nature of the payments which created an income gap where a person was financially penalised if they earned just over the qualifying threshold. Those paid on a non-monthly basis are particularly at risk of being unfairly penalised. We are also concerned that the support payments have not reached all low-income households. Further, the unsophisticated nature of the payment system has placed significant limitations on how the system has met the needs of different groups such as families, older people and those with disabilities.
Overall, the payments have had a significant impact and have boosted the finances of low-income households. But we have heard these payments are not a sufficient response to the scale of the issues at hand, and many people in receipt of these payments still could not meet essential costs or had only a temporary reprieve. We are particularly concerned that the additional support offered to those with disabilities was only £150 per year and we recommend that this particular support be increased in proportion to the costs that people with disabilities incur.
The Government should consider bringing forward its evaluation of the cost of living payments so that preliminary analysis can be fed into decisions on possible future payments in the next financial year. Given we have also heard that an uplift of the regular benefits received would be more beneficial for budgeting than ad-hoc cost of living support payments, the Government should consider uprating Universal Credit instead of issuing these payments. It should maintain the ad-hoc payment system for those on legacy benefits as these benefits cannot be so easily uprated.
When examining international support for those facing cost of living pressures, we found that most comparable nations offered families with children and young people additional support. While the UK has been relatively generous in cash terms to those in need of additional support, this failure to provide extra support for families is notable and should be examined further by the UK Government as those with children face higher costs but have currently only received the same flat-rate support as people without children. Future cost of living support payments should take account of family size.