Families ‘will still face enormous challenges in making ends meet’

Households will receive a £400 discount on their energy bills from October, among other measures to support people with living costs.

26 May 2022

Families will still face enormous challenges in making ends meet, despite the support package unveiled to combat the cost-of-living crisis, according to money experts.

Charities also said Chancellor Rishi Sunak is “kidding himself” if he believes the problem is temporary, as calls were made for longer term changes to the social security system.

The Chancellor’s package of targeted Government support unveiled on Thursday includes a £650 payment to more than eight million low-income households on Universal Credit, Tax Credits, Pension Credit and legacy benefits, with separate one-off payments of £300 to pensioner households and £150 to people receiving disability benefits. These groups are among the most vulnerable to rising prices.

Households will also receive a £400 discount on their energy bills from October.

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown said: “Unfortunately the sheer scale of energy price rises mean that despite the support announced today, a huge number of families will still face enormous challenges in making ends meet.”

She added: “What’s more, by waiting until October to provide the energy grant, there’s a real risk that people’s financial resilience will be completely exhausted by then.”

The state pensions triple-lock will also be reinstated.

The triple-lock guarantees that pensions grow in line with whichever is highest out of earnings, inflation or 2.5%, but the earnings element was temporarily suspended for 2022/23 due to the distorting impact of the coronavirus crisis on wages.

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown said: “The Chancellor did confirm the pension triple-lock would be back next year and added if inflation remains high then pensioners will receive a further boost, but… that is not until next April and many pensioners will need to battle through a winter where their costs will likely soar.”

Steven Cameron, pensions director at Aegon said: “The state pension increased in April by only 3.1%, after the triple-lock formula was amended, far below inflation which is now running at 9%.

“Had the state pension been increased by this amount, someone entitled to the full rate would have been receiving a weekly state pension of £195.75 a week, £10.60 above the actual level of £185.15. This leaves an individual’s purchasing power £551.20 a year less.”

Mr Cameron said the “good news” is that payments being made to the poorest pensioner households “will more than compensate for this”.

Caroline Abrahams, charity director at Age UK said many poorer pensioners are currently missing out on Pension Credit, adding: “We know that some three-quarters of a million are missing out at the moment, so we urge anyone who thinks they may be eligible to put in a claim without delay.”

Christians Against Poverty’s director of external affairs, Gareth McNab, said the charity is dealing with some households with much higher deficits than the amount of support offered in the package, adding: “The simple truth is that while more generous, even these payments will fail to keep many out of destitution.”

Imran Hussain, director of policy and campaigns at Action for Children, said: “The measures announced today will help, but won’t fully shield families with children from the pain they’re experiencing.

“With more mouths to feed, more rooms to heat and more clothes to wash, families with children feel price rises the most and are at greatest risk of falling into poverty.

“Ultimately, we need a stronger social security system to ensure all families with children can meet their basic needs.”

Alison Garnham, chief executive of Child Poverty Action Group said: “The Chancellor is kidding himself if he thinks that the problem is temporary or that the package he offered today will stop people finding themselves so far back that they never recover.”

Unite general secretary Sharon Graham said: “We need a windfall tax on all those who have profited while people have suffered, not just energy firms.”