Household Support Fund increased by £500m in £15bn ‘cost-of-living package’
The UK government is set to increase its Household Support Fund by £500m, in a bid to support the country’s most vulnerable from additional costs linked to the cost-of-living crisis.
Rishi Sunak, the chancellor of the exchequer, said today that he would be adding the extra money to the fund, as well as extending the period for which it will be open by six months.
Among other announcements in what the government is calling a £15bn support package for low-income households, Mr Sunak pledged to ensure that all households will receive a discount of up to £400 on their energy bills from October – the original pledge was £200. The requirement to pay this money back will also be scrapped.
An estimated eight million of the country’s most vulnerable households will receive support of up to £1,200 this year to deal with rising living costs and energy prices, including a one-off £650 cost-of-living payment.
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The new money comes just two months after Mr Sunak revealed during his Budget in March that he would be adding £500m to the Household Support Fund, taking it to £1bn at the time.
The fund was launched in October 2021 amid the cost-of-living crisis, to help struggling households get through the winter. It came after the £20-a-week Universal Credit uplift was cut.
It is used to support households with the cost of essentials, although local authorities have flexibility in addressing local needs.
It was expected to end in October 2022, but will now continue until 2023.
The Household Support Fund applies to England only, with devolved governments receiving money through the Barnett formula alongside this. Scotland will receive £41m, Wales £25m and Northern Ireland £14m.
In terms of the other support being offered, the direct cost-of-living payment of £650 will be means-tested by the Department for Work and Pensions. It will come in two lump sums, placed directly into bank accounts in July and September.
There will also be additional support for pensioners through a £300 pensioner cost-of-living payment, as well as a £150 disability cost-of-living payment.
To pay for some of this, the government will implement a new levy on the profits of oil and gas companies. These companies’ profits have surged as a result of rising gas and oil prices, spurred on by the war in Ukraine.
Under the Energy Profits Levy, profits for these companies will be taxed at a rate of 25%. This is expected to raise around £5bn in its first 12 months. The government said this will be temporary and will be phased out once energy prices return to normal levels.
The government will also implement a new investment allowance, which saves companies 91p for every £1 they invest. The government says this will double the tax relief available to these firms and ensure that the more they invest, the less tax they will pay.
“We know that people are facing challenges with the cost of living and that is why today I’m stepping in with further support to help with rising energy bills,” Mr Sunak said.
“We have a collective responsibility to help those who are paying the highest price for the high inflation we face. That is why I’m targeting this significant support to millions of the most vulnerable people in our society. I said we would stand by people and that is what this support does today.
“It is also right that those companies making extraordinary profits on the back of record global oil and gas prices contribute towards this.
“That is why I’m introducing a temporary Energy Profits Levy to help pay for this unprecedented support in a way that promotes investment.”
