Chancellor Rishi Sunak has announced a raft of new measures to attempt to help households across the UK manage the cost-of-living crisis.
In a statement, the Chancellor said the government is helping people because the “struggle is too hard, and the risks are too great”.
Mr Sunak said that the UK is experiencing the highest levels of inflation for 40 years, averaging about nine percent this year.
He added that the reasons were largely due to Russia’s war in Ukraine and the COVID-19 lockdowns in China.
In response, the Chancellor announced a total cost of living support package which he says is worth £15bn to help families with rising costs and to support the most vulnerable in society.
Speaking to BBC Radio Suffolk, Andrew Diver, head of taxation, at Beatons said:
“This is a more welcome announcement than his previous one [measures announced in his March spring statement].
“Previously, in terms of help with fuel prices households were only getting a £200 grant, now this has been increased to £400 and is non-repayable - so he has put his hands deeper in his pockets to help this time.
“The package does help those in society who are more vulnerable, though I would also have liked to have seen some measures targeted at families with children and towards the additional costs of fuel.
“The new help towards energy bills is positive. The grant will be spread over the next six months or so, so for those who pay by direct debit, average monthly payments should come down by around £66.67 - but there is a note of caution as the chances are that come October, due to the price cap increase, bills will go up again so this could be only a minor softening of the blow.
“Those on a pre-payment meter will be helped in a different way, with something along the lines of a voucher or a credit scheme.
“It is also important to remember that the government giving out money can have an inflationary effect, which sees prices rising further.
Usually when there’s high inflation – and there is now - governments tighten their belts to try to stop inflation running away with itself, so while the support is welcome, a knee jerk reaction can have downsides too and that might mean that the government has to step in again.”
What can households expect and when?
A one-off cost of living payment of £650 for households on means-tested benefits. The Department for Work and Pensions will make the payment in two lump sums directly into claimants’ bank accounts – the first from July, the second in the autumn. Payments from HMRC for those on tax credits only will follow shortly afterwards.
Pensioners will be given a cost-of-living payment of £300 for pensioner households paid in November or December alongside the winter fuel payment.
A £150 disability cost of living payment to individuals in receipt of extra cost disability benefits will be paid by September.
Energy payment rebate
A doubling of the universal rebate through the Energy Bills Support Scheme, providing an additional £200 to households with a domestic energy meter. This means that the earlier announced £200 energy bill loan has now been amended – it doubles and becomes non repayable.
How will these measures be funded?
To help pay for support to households – the Chancellor said the government is introducing a new temporary 25% Energy Profits Levy for oil and gas companies.
Mr Sunak said this reflects the profits of such companies and that at the same time, in order to increase the incentive to invest, the new levy will include an 80% investment allowance. The Chancellor said this approach allows the government to deliver support to families, while encouraging investment and growth.
It is also important to mention that for those who are still in severe financial difficulties, even after receiving this support, further help may be available by contacting your local authority and asking about the Household Support Fund which has an extra £500m following the announcement.