The Chancellor of the Exchequer, Rishi Sunak, on Thursday May 26th 2022, delivered a statement to the House of Commons, setting out the Government’s plans to support people after the average inflation rate reached 9% in April, resulting in millions of households across the country to struggle covering for the rising cost of living.?The Government will work towards new measures in order to bring back the rate within the 2% target.
The new measures will be partially funded by the introduction of the Energy Profits Levy, a 25% surcharge on the additional profits made by the oil and gas sector. This temporary windfall tax is expected to raise around £5 billion in its first 12 months. The plans set out a number of measures aimed at providing support especially for those on the lowest incomes and is quantified in £15 billion of further support in addition to over £22 billion already previously announced. This will entitle the almost 8 million most vulnerable households to £1,200 one-off support in total this year, including the £150 council tax rebate that was paid to many households in April 2022. The new Government measures integrate the Energy Bill Support Scheme which was announced earlier this year and that provided for domestic electricity customers in Great Britain to receive a £200 reduction in their electricity costs from October 2022 with the requirement to repay such reduction through increased bills over the subsequent five years. The current provisions increase this universal support to £400 and turns it into a grant rather than a loan, scrapping the requirement for it to be repaid.
Key measures will be introduced to support disadvantaged groups such as people in receipt of state benefits (with a one-off non-taxable Cost of Living Payment of £650) or in receipt of a pension (with a £300 Pensioner Cost of Living Payment) and people with disabilities (with a one-off payment of £150 in September 2022). Chancellor Sunak also announced a £500 million increase for the Household Support Fund, which is delivered by Local Authorities and provides households with payments to help those in most need with essential needs like food and utilities. The measure was due to run until October 2022 and has now been extended until March 2023. The Household Support Fund is administered by local councils and the eligibility will be determined by individual councils.
Maja Tamiazzo
Photo by Towfiqu barbhuiya on Unsplash
