Why the cost of living payment will not go far enough to help vulnerable people

The government’s cost of living payment will not go far enough to help millions of vulnerable people who are struggling to afford food and pay their bills, campaigners warn. 

Eight million low-income households will receive the next £301 instalment of the cost of living payment from April 25. Over the next year, there will be three instalments paid by the Department of Work and Pensions (DWP) and they will total £900. 

But many people are missing out on vital government support in the cost of living crisis. 

“The cost of living crisis has exacerbated pre-existing poverty that was already extreme. Cost of living payments will certainly help but they represent a drop in the ocean when it comes to the scale of growing inequality in the UK,” Sabine Goodwin, the coordinator of the Independent Food Aid Network, said. 

“We welcome the cash-first approach but the government needs to introduce permanent, long-term solutions that ensure everyone can afford adequate and nutritious food whether working or not.”

Almost two million households living in fuel poverty will miss out on cost of living payments in 2023 to 2024, according to new figures from Child Poverty Action Group (CPAG) and the University of York.

“The government’s one-off cost of living payment is welcome, but this data shows it doesn’t go far enough,” Alison Garnham, the chief executive of CPAG, said. “Flat-rate payments leave families with children, who have higher living costs, short-changed.”

Around 68 per cent of all fuel poor households are receiving cost of living payments, but that leaves 32 per cent of them with no support. That is more than 1.7 million households, of which 688,000 are families with children. 

Garnham added: “Increasing child benefit, which lost a quarter of its value in the last decade and goes to lower and middle income households, is the first step to making sure struggling families have enough money to heat their homes.” 

Other charities warn that even with the cost of living payment, low-income families do not have enough money to survive the cost of living crisis. 

Universal credit claimants are £140 short of the money they need to survive each month, according to recent analysis from the Trussell Trust and Joseph Rowntree Foundation (JRF).

And so nine in 10 people on universal credit are currently sacrificing essentials because they don’t have enough money. Charities are calling for an “essentials guarantee” to ensure people can afford the basics at the very least. 

“We must remind political leaders that, whether they like it or not, this is driving millions of people into hardship and it is not a problem that will go away without bold and concerted action,” Katie Schmuecker, the principal policy adviser at JRF, said.

“It is time to build a system that is needs-tested – where the support people get is linked to the actual costs of essentials to meet basic needs rather than the baseless system people have to suffer now.”

Previous research from the Institute for Fiscal Studies (IFS) showed there are clear problems with bulk cost of living payments and not everyone will benefit from them in the same way.

Those with earnings just low enough to qualify for a small amount of universal credit get the cost of living payment. But those with earnings very slightly higher – who are not entitled to any universal credit – get no cost of living payment.

The IFS estimates that there are around 825,000 people who could, in principle, increase their total income by reducing the amount they earn – so they could claim the cost of living payment along with universal credit.

Emma Revie, Chief Executive of the Trussell Trust, said: “For too long people have been going without because social security payments are not based on a real reflection of life’s costs and are being pushed deeper into hardship as a result.

“We all deserve the dignity of staying warm, fed, and protected from poverty and we know with the right financial support, people would not be forced to experience hunger. 

“It’s time to guarantee our essentials and for the UK government to urgently change the law so that the standard allowance of universal credit will always cover our essentials. By pledging this the government will be taking a crucial step towards ending the need for food banks.”

Over winter, people received an energy rebate – a £66 or £67 discount on their energy bills each month. But over four million of these monthly payments have not been paid to or redeemed by households, according to the End Fuel Poverty Coalition. 

The Big Issue previously reported that hundreds of thousands of people with prepayment energy meters had not received the £400 government rebate because they could not access the voucher scheme or did not know about it.

Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “Millions of people will be worse off in 2023 to 2024 as energy bills remain high, but support from the government has fallen in real terms.

“Without further government support and rapid improvement in the energy efficiency of homes, the Dickensian conditions experienced by millions this winter will be replicated again. Until Britain’s broken energy system is reformed, we will continue to see households rely on government support to help them through the energy bills crisis.”

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