How Rishi Sunak’s New Cost of Living Support Can Really Affect You

Chancellor Rishi Sunak has just announced a series of new measures to tackle the cost-of-living crisis.

With inflation already at a 40-year high of 9% (and 10.9% for the lowest income households in the UK) and energy bills skyrocketing, there is no doubt that the general population is facing a serious squeeze on your budgets.

The government initially resisted calls to provide more aid after Sunak’s spring statement was criticized for its minimal measures, but has since turned around with this latest announcement.

See how the experts think the Treasury news will really impact people — and if any of the stocks go far enough.

1. £400 extra for energy bills on a concession

What is that? All UK households will now be able to receive £400 for their energy bills. Previously it was a £200 loan, but as a grant (which is twice as big) it no longer has to be paid off in five years.

Payment will be automatic on smart meters or directly on customers’ debit and credit accounts. For those who pay otherwise, will receive through vouchers.

This payment will be spread over six months for everyone.

It will also apply directly to families in England, Scotland and Wales. A similar amount is due to be delivered to Northern Ireland, but the distribution method for this has yet to be announced.

What does it mean to you? While this will undoubtedly help the crisis, the average annual energy bill has increased by £700 since Ofgem lifted the energy price cap in early April.

Then from October it should rise again by £800 – meaning a total £1,500 increase for the average family on their annual energy bill.

The extra £400 relieves that pressure, but doesn’t remove it.

What did the critics say? This particular measure was praised by Martin Lewis of MoneySavingExpert as it meant people no longer had to give money back to the government, as Sunak initially outlined.

2. Payment of £650 to the worst off families

What is that? Approximately eight million low-income households will receive a one-time payment of £650 if they are on Universal Credit, tax credits, pension credits and other means-tested benefits.

This money will go indirectly into people’s bank accounts in two lump sums, first in July and then in autumn.

What does it mean to you? That money can go towards bills or living expenses. With the average family facing an extra charge of £1,200 a year – and lower-income households facing 10.9% inflation – this could be a significant boost to help.

What did the critics say? For some, this ad was lauded, with Save The Children saying it offers “breathing space” for those struggling.

The director of Generation Rent, Alicia Kennedy, also admitted that this package is “much closer to what people will need to manage rising prices”, but pointed out that “one in three tenants has had rent increases this year”.

She added: “For renters living in homes where energy bills are included in the rent, such as shared housing, it is unclear whether the landlord has any obligation to pass this new support on to them through a reduced rent.

“The government needs to clarify how it will ensure that tenants receive the support package as the chancellor intended.”

She added that the local housing subsidy is still frozen at 2019-20 levels as well, and has not increased with inflation.

The Social Market Foundation, a public policy think-tank, praised the announcements and said they were “the simplest and most effective way for the government to provide needed help.”

Aveek Bhattacharya, Chief Economist at SMF, said: “Having wasted months on over-engineered schemes, it is extremely welcome that he has joined us in recognizing that the best way to help struggling families is the most direct: giving them the money they need. to deal with higher prices.”

3. Extra pay for pensioners £300

What is that? From the autumn, eight million pensioner families will receive £300 to help pay for winter fuel in November or December.

Those on lower incomes who also receive pension credit will receive £650 as well.

This one-time payment accompanies the Winter Fuel Payment which is between £100 and £300.

What does it mean to you? For those born on 26 September 1955 or earlier, living in the UK for at least one day during the week of 20-26 September 2021, you qualify for this payment.

Alternatively, you may qualify if you live in Switzerland or a country in the European Economic Area and can prove that you have a genuine and sufficient bond with the UK.

People normally receive this money automatically and do not need to apply for it.

What did the critics say? The Center For Aging Better said earlier this year that an additional 200,000 people of retirement age have fallen into poverty. In response to today’s announcements, the nonprofit said: “More efforts are needed to address the systemic problems that continue to push retirees into poverty and erode people’s quality of life later on.

“More than one in six people of retirement age in the UK are in relative poverty and today’s announcements will only help solve that.”

4. One-time disability living allowance £150

What is that? This one-time payment of £150 for people with disabilities could come in addition to payments that Sunak has already announced.

What does it mean to you? Charities warned in March that the 14 million people with disabilities in the UK could find themselves in debt due to the rising cost of living.

Charity Scope has previously claimed that people with disabilities are facing an extra £583 cost due to rising energy bills.

What did the critics say? Lewis said this is definitely good news, as those living with disabilities often have higher energy costs because they use extra equipment.

In response to Sunak’s announcement, Scope tweeted: “It is significant to receive this frank acknowledgment from the Chancellor. But this targeted support support cannot be unique.”

The charity added: “One payment won’t do. Long-term support is needed to combat the extra costs that people with disabilities face.”

What else do you need to know about these ads?

It is important to note that these benefits are not contradictory. People who receive universal credit and disability payments will still be able to receive the two additional payments announced by Sunak this week.

These payments are partially from Sunak’s windfall tax on oil and gas companies, which is a temporary fee. It is expected to raise £5 billion next year. The Treasury will also have to use funds from elsewhere to manage these extra costs.

The cost of living also continues to rise, with prices rising faster than they have since the 1980s. Prices are not expected to fall for the next year and beyond.

Energy bills are likely to continue rising far beyond what analysts have predicted, while food prices and fuel costs won’t drop anytime soon either.

The chancellor admitted he couldn’t remove the problem for everyone, but he was trying to reduce the general pressure.

What else could have been suggested?

Labor pointed out that there were several other measures the government could have taken to help with the crisis.

This includes fighting tax privileges enjoyed by non-residents, introducing an emergency budget, reducing VAT and preventing young workers from paying more for their National Insurance Contributions.

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