The Social Security (Additional Payments) Bill 2022-23 was published on 15 June 2022. The Bill makes provision for two additional payments announced on 26 May 2022 as part of the Chancellor’s cost of living support package:
- £650 Cost of Living Payments, payable in two instalments to claimants of certain means-tested benefits, such as Universal Credit.
- A £150 Disability Cost of Living Payment for recipients of certain non-means-tested disability benefits, such as Personal Independence Payment.
Rising cost of living
The cost of living has been increasing substantially across the UK since early 2021. From April 2021 to April 2022, inflation as measured by the Consumer Prices Index (CPI) reached 9%. Energy prices have increased dramatically.
In February 2022, the Chancellor announced rebates on energy bills and Council Tax rebates to support household finances. The March Spring Statement included policies such as a fuel duty cut and raising the level at which people start to pay National Insurance.
The largest support measures announced in February and March were not targeted specifically at low-income households on benefits or other benefit claimants.
In November 2021, the Government did improve the generosity of Universal Credit for working claimants. However, this only fully compensated a minority of claimants for the removal of a temporary £20-a-week increase to payments which was introduced during the early stages of the coronavirus crisis.
It’s been longstanding practice that annual benefit uprating takes place by the Secretary of State for Work and Pensions reviewing the value of benefit rates based on inflation levels the previous September. Any increases are applied in April.
In recent months, campaigners and MPs have been concerned the increase in April 2022 (3.1%) did not capture rising inflation from autumn 2021 onwards.
May 2022 cost of living package
The Cost of Living Payments legislated for in the Bill will cost an estimated £6.3 billion. They will reach around 8 million households on means-tested benefits, and 6 million individuals will benefit from the Disability Cost of Living Payment. The Chancellor announced three other measures in May 2022 which do not require new primary legislation, bringing the total cost of the cost of living support package to £15.3 billion:
- A £300 Pensioner Cost of Living Payment, paid in addition to Winter Fuel Payment.
- An expanded Energy Bills Support Scheme providing a non-repayable one-off energy bill reduction of £400.
- And an additional £500 million to extend the Household Support Fund.
The Energy Profits Levy on North Sea oil and gas profits was announced at the same time to raise revenue, and will be legislated for separately.
Taken together with the February package and other measures, the Government estimates it is spending £37 billion on cost of living support this year.
Targeting the lowest income households
Announcing the May 2022 cost of living support package, the Chancellor stressed the targeted nature of the new interventions, making payments specifically to “the most vulnerable people in our society: those on the lowest incomes, pensioners and disabled people.” He justified additional support for pensioners and disabled people by noting the impact of higher energy bills on these groups.
The Treasury’s distributional analysis estimates the package will target support at the lowest income households. Many commentators have praised the package for being more targeted than the Government’s earlier measures. The Institute for Fiscal studies has said the Chancellor is “engaging in serious redistribution from rich to poor.”
Since plans for additional Cost of Living Payments were announced, some people are concerned that they do not vary with family size; some claimants will miss out on support because they won’t have been claiming qualifying benefits by 25 May; and some benefits like contributory New Style Employment and Support Allowance will not include additional payments.
What does the Bill do?
The Government is asking Parliament to fast-track this Bill through the parliamentary legislative process. It is scheduled to complete Second Reading and all remaining Commons stages on Wednesday 22 June. This is owing to the Government’s intention to pay the first Cost of Living Payment instalment to means-tested benefit claimants by 14 July. To do so it requires the provisions in this Bill to be in place by then, with Royal Assent required by 30 June 2022 at the latest.
The Bill provides powers to make the two Cost of Living Payments to certain means-tested benefit and tax credit claimants, and the Disability Cost of Living Payment to those claiming non-means-test disability benefits.
It does not make provision for any of the other measures in the Government’s May 2022 cost of living support package, as these relate to existing payments or schemes implemented under separate legislative provisions.
The Bill’s territorial extent and application covers England and Wales, Scotland, and Northern Ireland.
Detailed commentary on the provisions of the Bill can be found in section 4 of this briefing and the Explanatory Notes accompanying the Bill.