The latest paper in the Building a New Scotland series, Social Security in an independent Scotland, published this week, outlined how a Minimum Income Guarantee could ensure everyone can achieve a dignified standard of living.
The proposals included how a Minimum Income Guarantee could:
be set at a higher rate than current UK Government benefits and respond to real changes to the cost of living
enable all households to live with financial security
ensure those who are able achieve the minimum income level through fair and accessible paid work
"For too long, Westminster's approach to social security has provided inadequate financial support."
Social Justice Secretary @S_A_Somerville sets out how an independent Scotland could deliver a new approach, based on dignity, fairness and respect.
Social Justice Secretary Shirley-Anne Somerville said: “With limited powers, the Scottish Government has already delivered transformative social security benefits that have made a real difference to people’s lives. Due to the policies of this government, an estimated 90,000 fewer children are expected to live in poverty this year.
“However, we want to go further and that is why we have proposed that a Minimum Income Guarantee could be introduced in an independent Scotland to ensure everyone has enough support to not only survive, but to thrive.
“The UK approach to social security has provided inadequate levels of financial support and has eroded the effectiveness of the safety net. It is only with the full economic and fiscal powers of an independent nation that we can use all the levers other governments have to tackle inequalities in Scotland.”
Social Justice Secretary writes to DWP on work capability announcements
Changes to work capability assessments announced in the Autumn Statement are ‘deeply concerning’ and could mean people receive less support based on a change of criteria rather than a change in their health, Social Justice Secretary Shirley-Anne Somerville has said.
Writing to DWP Secretary Mel Stride, Ms Somerville highlighted how the Scottish Government has taken a different approach with its social security system being based on treating people with fairness, dignity and respect.
Ms Somerville said: “I remain deeply concerned about the changes to the activities and descriptors for ‘getting about’ for Limited Capability for Work, and the mobilising and substantial risk criteria for limited capability for work-related activity.
“The changes you are proposing, including the extension of the sanctions regime, will have very significant additional impact on some of the most vulnerable people in our communities who need our support most.
“In Scotland, we have taken a different approach to devolved employability support; our services remain voluntary, and we want the support we provide to be seen as an opportunity, not a threat, with fairness, dignity and respect at its heart.
“In delivering our first devolved employability service, Fair Start Scotland, Scottish Government officials had a close working relationship with Job Centre Plus to ensure we were collectively working to provide support for the people of Scotland.”
BPS SUPPORTS CAMPAIGN TO MAKE UNIVERSAL CREDIT ENOUGH FOR PEOPLE TO AFFORD TO COVER ESSENTIALS
The British Psychological Society has joined the Joseph Rowntree Foundation (JRF), the Trussell Trust, and other leading health and care organisations and charities to call for an “Essentials Guarantee”, a new law to make sure Universal Credit’s basic rate is always at least enough for people to afford the essentials.
The organisations are warning that so many people are routinely going without the essentials it poses a serious risk to the UK’s health.
Together, they have written to the Prime Minister to express their worry that, as the high prices of everyday essentials like food and housing persist, too many people are expected to live with what can be devastating knock-on consequences.
JRF’s own analysis shows the weekly Universal Credit standard allowance is £35 less than the cost of essential items for a single person, contributing to millions of people forced to use food banks because they can’t make ends meet.
Dr Roman Raczka, President-Elect of the British Psychological Society, and Chair of its Division for Clinical Psychology, said:“Nobody should be in a position of being unable to afford the essentials they and their families need to sustain their health and wellbeing, and it’s clear the current level of Universal Credit falls woefully short.
“Poverty is one of the major risk factors for the development of physical and mental health problems, and we know that children growing up in poverty are three-to-four times more likely to develop mental health problems, which also leads to long-term impacts upon their education, life chances and quality of life.
“If the government is truly committed to preventing health inequalities from widening further, tackling poverty, and reducing pressure on our already stretched and underfunded public services, it must commit to the Essentials Guarantee to protect this generation, and generations to come.”
About the Essentials Guarantee
The Essentials Guarantee would embed in our social security system the widely supported principle that, at a minimum, Universal Credit should protect people from going without essentials.
Developed in line with public attitude insights and focus groups, this policy would enshrine in legislation:
an independent process to regularly determine the Essentials Guarantee level, based on the cost of essentials (such as food, utilities and vital household items) for the adults in a household (excluding rent and council tax);
that Universal Credit’s standard allowance must at least meet this level; and
that deductions (such as debt repayments to government, or as a result of the benefit cap) can never pull support below this level.
The UK Government would be required to set the level of the Essentials Guarantee at least annually, based on the recommendation of the independent process. JRF analysis indicates that it would need to be at least around £120 a week for a single adult and £200 for a couple.
A free independent advocacy service to support disabled people to access Scottish Government benefits has marked its first year in operation.
The Scottish Government is investing more than £20 million to deliver this service over the course of four years. This independent service is available to people with a disability who may need extra support. This could include people with a sensory disability, mental health condition or learning disability. The service is also available to parents or carers who need support to access benefits for a child.
The service, which was introduced in January 2022, enables disabled people to be more involved in the processes and decisions which affect them and advocates will provide the most appropriate form of support to each individual based on their circumstances.
Minister for Social Security Ben Macpherson said: “I am delighted that, in its first year, the Independent Advocacy Service has supported over 550 people applying for Scottish Government social security benefits.
“The service is a key part of our human rights approach to social security and how the values of dignity, fairness and respect in our social security system work in practice.
“The service helping disabled people to access the financial support they are entitled to, and is delivering on our commitment to make our system as inclusive as possible.
“With the Scottish Government’s commitment to invest more than £20 million in it, the advocacy service will be able to assist even more disabled people access the help they are entitled to over the coming years.”
CEO of VoiceAbility, Jonathan Senker said: “Over our first year of delivering the Independent Advocacy Service, people tell me that it enabled them to apply for social security benefits when before they felt daunted by the process. They say that advocates supported them to express themselves openly, when previously they felt obliged to ‘put on a brave face’ or underplay their needs.
“It’s vital that people can access the benefits to which they are entitled. I am proud of VoiceAbility’s skilled team of advocates, who are ready and available to support disabled people across Scotland. I encourage anyone who thinks an advocate could help them to access benefits to contact us. We’re here on the phone, online and in-person to make sure you’re heard when it matters.”
The independent service was introduced in January 2022, ahead of a pilot for Adult Disability Payment – which replaces Personal Independence Payment (PIP) in Scotland. Adult Disability Payment was introduced across Scotland in August 2022.
Did you know you can get free, independent support to access Social Security Scotland benefits if you’re disabled? If you’re based in or near Edinburgh, come and chat to Alex at one of our drop-ins:
Alternating Mondays, 1-3pm: Edinburgh Food Project, Pilton food bank at St Margaret Mary, Boswall Pkwy, EH5 2JQ – from 16 January
Every Wednesday, 10am-2pm: The Salvation Army, 36 Wardieburn Drive, EH5 1BZ
Every 1st and 3rd Thursday of the month, 1-3pm: Edinburgh Food Project, Broughton food bank at Broughton St Mary’s Parish Church, Bellevue Crescent, EH3 6NE
Every 2nd and 4th Thursday of the month, 9.30am-1pm: Citizens Advice Bureaux at 23 Dalmeny Street, EH6 8PG – from 12 January
Every 1st and 3rd Friday of the month, 11am-1pm: Craigmillar Library at 101 Niddrie Mains Road, EH16 4DS
The Department for Work and Pensions is laying emergency regulations today (Monday 21 March 2022) so those arriving in the UK from Ukraine as a result of the Russian invasion can access Universal Credit and jobs support immediately.
Ukrainians will also be eligible for Housing Benefit, Pension Credit, Personal Independence Payment, Child Disability Living Allowance and Carers Allowance, and Attendance Allowance. Contributions-based Employment and Support Allowance (ESA), and Jobseekers Allowance (JSA) are also available for those Ukrainians who meet the criteria.
Translation services are available to help new arrivals with phone applications, with Work Coaches in DWP Jobcentres on hand to support people making claims online.
DWP staff are also delivering additional face-to-face assistance to those who need it – including tailored support to find work and advice on benefit eligibility – and will continue to do so.
Without the emergency legislation people arriving from Ukraine would be subject to the Habitual Residence Test, meaning they would have to wait up to three months before being able to receive income-related benefits, including Universal Credit.
Secretary of State for Work and Pensions Thérèse Coffey said: “My priority is that people fleeing the unimaginable horrors in Ukraine to seek safety here get the support and help they need from day one to move forward in their lives immediately.
Financial Secretary to the Treasury Lucy Frazer said: “It is vital that families coming from Ukraine can support their children from the moment they arrive, and by adjusting child benefit rules and ramping up our support, the tax system is pivoting to ensure this happens.
Salvation Army Refugee Response co-ordinator Major Nick Coke said: “We welcome the news that Ukrainians coming to the UK will be able to access benefits immediately and for those who are able, help to find suitable work.
“With offices on the ground in Ukraine and the border countries providing emergency food and shelter, The Salvation Army sees first-hand the trauma those displaced by war have experienced.
“It is fitting that they receive targeted help when seeking refuge in the UK.”
Disabled people with the most serious lifelong health conditions will have more financial security under Scotland’s social security system.
Adult Disability Payment will replace the UK Government’s Personal Independence Payment (PIP). It will open for new applications in pilot areas starting this month.
Disabled people on the highest components of the new benefit and whose needs are highly unlikely to change will be eligible for an “indefinite award”. In effect, this will mean they will not be subject to reviews and can rely on their new benefit into the long-term.
People with ongoing awards of Personal Independence Payment and Disability Living Allowance do not need to make an application for Adult Disability Payment. They will be contacted from this summer to let them know when their awards will automatically be moved safely and securely to Adult Disability Payment.
Social Security Minister Ben Macpherson said: “The introduction of indefinite awards, as part of Adult Disability Payment, underlines our commitment to deliver on the principles of Scotland’s social security system to treat people with dignity, fairness and respect.
“In making this decision, we have engaged with a wide range of people with lived experience of the current system and will continue to listen as we design and build a social security system that works for disabled people.
“We want to ensure that people on the highest levels of Adult Disability Payment awards receive long-term and adequate support, because those with lifelong conditions, or disabilities resulting in needs highly unlikely to change, should not be subject to unnecessary reviews when it is reasonably expected that their situation will not change.
“Under the UK Government’s Personal Independence Payment, similar awards have generally been reviewed between every 2 to 10 years. However, disabled people tell us that even review periods of 10 years can create stress and anxiety. That is why we have decided to introduce indefinite awards – we are determined to do things differently and build a more compassionate system in Scotland.”
Moira Tasker, Chief Officer, Inclusion Scotland said: “Inclusion Scotland warmly welcomes the announcement that there will be indefinite awards of Adult Disability Payment. We are glad the Minister has acted on the views expressed by disabled people and adopted this measure.
“It will come as a huge relief for disabled people with high, permanent levels of impairment who faced continual reassessments under the flawed DWP, Personal Independent Payment, system. Indefinite awards will also provide some certainty and security for those who receive them.”
Morna Simpkins, Director of MS Society Scotland, added: “We are pleased the Scottish Government has listened to the views of the MS community and MS Society Scotland and will re-introduce indefinite awards.
“MS is relentless, painful, and disabling. Indefinite awards will provide some people living with progressive long term conditions, like MS, with the security of knowing they will not have their awards downgraded or income cut.”
Adult Disability Payment is the twelfth benefit to be introduced by Social Security Scotland since September 2018, which includes seven new benefits, unique to Scotland.
130% rise in working claimants during the pandemic
Low-income workers facing “perfect storm” this spring unless ministers improve “woefully inadequate” levels of support, warns union body
Cost-of-living crisis already depressing value of UC, TUC analysis reveals
*NEW POLL* shows many families already struggling to make ends meet
The TUC has warned that millions of low-income workers face a “perfect storm” this April with universal credit (UC) falling behind the cost of living as energy bills and taxes rise.
The warning comes as new TUC analysis reveals that the number of workers on UC has increased by 1.3 million since the eve of the Covid-19 pandemic.
The analysis of official statistics shows that over 2.3 million workers were in receipt of UC at the end of 2021, compared to just over one million on the eve of the pandemic in February 2020.
This represents an increase of 130 per cent over the last two years and means 1 in 14 (7.2 per cent) working adults now claim UC.
The TUC says the huge rise in UC recipients has been driven by working households being pushed into financial hardship during Covid, with millions facing a cost-of-living crunch this year.
Basic value of universal credit now lower than at start of pandemic
The TUC says that the basic value of UC is now lower than at the start of the pandemic as a result of UC not keeping up with inflation.
TUC estimates show that the value of UC has fallen by £12 a month in real terms when measured against CPI inflation and £21 a month when measured against RPI inflation compared to just before the pandemic (February 2020).
The TUC says this trend will only get worse in the months ahead with inflation forecast to rise further.
Struggling to cover the basics
The TUC warns that millions of low-paid families face a crunch point in April when energy bills and national insurance contributions go up – at the same time as UC continues to fall in value.
New polling – carried out for the union body before last week’s energy cap announcement and Bank of England forecasts – shows that many are already struggling to make ends meet:
One in eight workers (12 per cent) say they will struggle to afford the basics in the next six months. And a fifth of working people (22 per cent) say they’ll struggle to afford more than the basics.
Low-paid workers are more likely to be struggling. One in six (17 per cent) low-paid workers (those earning less than £15,000 a year) say they will struggle to afford basics in the next six months, and three in 10 (29 per cent) say they’ll struggle to afford more than the basics.
Parents of young children, disabled workers, key workers and BME workers are more likely to be struggling:
Nearly one in five families (18 per cent) with kids under 11 will struggle to afford the basics
Over one in five (21 per cent) disabled workers will struggle to afford the basics, compared to 10 per cent of non-disabled workers
14 per cent of key workers say they’ll struggle to afford the basics in the next six months, compared to 10 per cent of non-key workers
14 per cent of BME workers say they’ll struggle to afford the basics in the next six months, compared to 11 per cent of white workers
The poll also reveals that a fifth of workers (21 per cent) say they have Christmas debts to pay off this year – a number that rises to over a quarter (28 per cent) for workers with children of school age.
Better support needed
The TUC says the government must do far more to help struggling households to get through the months ahead.
The union body says the cost-of-living support announced by the Chancellor on Thursday is “woefully inadequate” and will provide families with just £7 extra a week – most of which will have to be repaid.
The TUC is also calling for UK Government to use the upcoming spring budget to:
Increase to UC to 80 per cent of the real Living Wage.
Introduce a windfall tax on energy companies, using the money to reduce household energy bills
Boost the minimum wage to least £10 an hour now
Work with unions to get pay rising across the economy
TUC General Secretary Frances O’Grady said: “Millions of low-paid workers face a perfect storm this April.
“At the same time as energy prices and national insurance contributions shoot up, universal credit is falling in value.
“The government must do far more to help struggling families get through the tough times ahead. The support package announced by the Chancellor last week is woefully inadequate.
“Universal credit urgently needs boosting and we need further action to reduce fuel costs for those battling to make ends meet.
“Oil and energy companies shouldn’t be making bumper profits, while many struggle to heat their homes.
“If ministers fail to do what is necessary, more households will be pushed below the breadline.”
On the need to boost pay, Frances added: “The best way to give working families long-term financial security is to get pay rising across the economy.
“That means increasing the minimum wage to at least £10 an hour now, and ministers requiring employers to negotiate sector-wide fair pay agreements with unions.”
“We know this rise will be extremely worrying for many people, especially those who are struggling to make ends meet”
Record increase in global gas prices sees energy price cap rise of 54%
Ofgem knows this rise will be extremely worrying for many people
Customers struggling to pay their energy bill should contact their supplier to access the help available
The energy price cap will increase from 1 April for approximately 22 million customers. Those on default tariffs paying by direct debit will see an increase of £693 from £1,277 to £1,971 per year (difference due to rounding). Prepayment customers will see an increase of £708 from £1,309 to £2,017.
The increase is driven by a record rise in global gas prices over the last 6 months, with wholesale prices quadrupling in the last year.
It will affect default tariff customers who haven’t switched to a fixed deal and those who remain with their new supplier after their previous supplier exited the market.
The price cap is updated twice a year and tracks wholesale energy and other costs.
It stops energy companies from making excessive profits, ensuring customers pay no more than a fair price for their energy.
The price cap allows energy companies to pass on all reasonable costs to customers, including increases in the cost of buying gas.
Since the price cap was last updated in August, the current level does not reflect the unprecedented record rise in gas prices which has since taken place.
Under the price cap mechanism, energy companies will be allowed to pass on these higher costs from April when the new level takes effect.
This is because energy companies cannot afford to supply electricity and gas to their customers for less than they have paid for it.
Over the last year, 29 energy companies have exited the market or been put in special administration in the wake of soaring global gas prices, affecting around 4.3 million domestic customers.
Jonathan Brearley, chief executive of Ofgem, said:“We know this rise will be extremely worrying for many people, especially those who are struggling to make ends meet, and Ofgem will ensure energy companies support their customers in any way they can.
“The energy market has faced a huge challenge due to the unprecedented increase in global gas prices, a once in a 30-year event, and Ofgem’s role as energy regulator is to ensure that, under the price cap, energy companies can only charge a fair price based on the true cost of supplying electricity and gas.
“Ofgem is working to stabilise the market and over the longer term to diversify our sources of energy which will help protect customers from similar price shocks in the future.”
Ofgem will tomorrow announce further measures to help the energy market weather future volatility by increasing financial resilience and have the flexibility to respond so that risks are not inappropriately passed on to consumers.
The further measures include enabling Ofgem to update the price cap more frequently than once every 6 months in exceptional circumstances to ensure that it still reflects the true cost of supplying energy.
Help available for customers:
If customers are struggling to pay for energy bills, they should contact their energy supplier as soon as possible. Depending on their circumstances, customers may be eligible for extra help with their energy bills or services, such as debt repayment plans, payment breaks, emergency credit for prepayment metered customers, priority support and schemes like the Winter Fuel Payment or Warm Home Discount rebate.
Breathing Space Scheme: This is a scheme to give households time to receive debt advice and find a solution to sort out their debt problems. Breathing space will last for 60 days as long as applicants remain eligible during which time all creditors who have been included will be informed and must stop any collection or enforcement activity. Once the breathing space ends, creditors will be able to collect the debt in the usual way. Call the National Debtline on Freephone 0808 808 4000 or visit www.nationaldebtline.org
The Citizens Advice consumer service can provide advice on how customers can resolve problems with their energy provider. You can contact Citizens Advice via webchat, or by calling 0808 223 1133. For complex or urgent cases, or if a person is in a vulnerable situation, they may then be referred onto the Extra Help Unit.
2. Ofgem will announce further measures tomorrow including:
Introducing an uplift in the wholesale cost allowance in the price cap: after reviewing the evidence, Ofgem has decided that the existing price cap methodology did not appropriately account for the additional wholesale energy costs energy companies have incurred during the current price cap period following the unprecedented scale of wholesale energy prices and volatility. This adjustment represents less than 10% of the overall price cap increase.
Changing licence conditions to give Ofgem the more flexibility to change the price cap level if needed in between the regular six-monthly cap updates: Ofgem has set ourselves five tests which mean we will only expect to use the power in exceptional circumstances.
Further reforms to the price cap from October: In December we set out three options to make the price cap more robust to high and volatile wholesale energy costs while preserving as far as possible the benefits of the price cap for consumers. The consultation published tomorrow will include all three options, with quarterly updates as our preferred option
Breakdown of costs in the energy price cap
Dual fuel customer paying by direct debit, typical energy use (GB £)
*Network costs: The main driver of this increase is the recovery of Supplier of Last Resort (SoLR) levy costs (£68). A supplier acting as a SoLR can make a claim for any reasonable additional, otherwise unrecoverable, costs they incur. These levy claims are paid to energy companies by the distribution network companies and recovered from consumers via their charges.
5. The charts below show the wholesale prices that are used to determine the wholesale cost allowance within the price cap from spring 2018 ahead of the introduction of the price cap in January 2019.
Wholesale costs make up the majority of a customer’s bill. An efficient supplier will purchase energy for their customers on the wholesale market in advance of when they need to supply that energy.
This purchasing strategy is reflected in how the wholesale allowance is calculated within the price cap. We observe the forward-looking energy contracts that energy companies typically purchase over time and combine these to determine the wholesale cost allowance within the price cap.
We do this twice a year when we update the price cap in August for the winter period (October – March) and in February for the summer period (April – September) based on the price of these forward-looking energy contracts over the previous six months.
The fixed horizontal line shows the average wholesale cost allowance for each 6 month price cap period based on the price of the relevant forward looking energy contracts (the jagged line).
The recent spike in the prices of relevant forward looking energy contracts over the last 6 months can be clearly seen. The scale and pace of wholesale price increases has resulted in a big increase in the wholesale cost allowance for the price cap level for summer 2022.
Wholesale gas price costs in the energy price cap
Pence per therm
Wholesale electricity price costs in the energy price cap
Pounds per megawatt hour
Data sets behind these graphs are proprietary and can be sourced from ICIS.
Chancellor’s statement – Energy Price Cap
Statement, as delivered by Chancellor Rishi Sunak, on 3 February 2022:
Mr Speaker,
The UK’s economic recovery has been quicker and stronger than forecast.
In the depths of the pandemic, our economy was expected to return to its pre-crisis level at the end of 2022.
Instead, it got there in November 2021 – a full year earlier.
Unemployment was expected to peak at nearly 12%.
Instead, it peaked at 5.2% and has now fallen to just over 4% – saving more than 2 million jobs.
And with the fastest growing economy in the G7 this year…
Over 400,000 more people on payrolls than before the pandemic…
And business investment rising…it’s no wonder Mr Speaker, that borrowing is set to fall from £320bn last year …
… the highest ever peacetime level …
… to £46bn by the end of this Parliament.
As we emerge from the depths of the worst recession in 300 years, we should be proud of our economic record.
The economy is stronger because of the plan we put in place; because of the actions we took to protect families and businesses.
And that plan is working.
But for all the progress we are making – the job is not yet done.
Right now, I know the number one issue on people’s minds is the rising cost of living.
It is the independent Bank of England’s role to deliver low and stable inflation – and the Governor will set out their latest judgements at midday today.
And just as the government stood behind the British people through the pandemic…
… so we will help people deal with one of the biggest costs they now face – energy.
The energy regulator, OFGEM, announced this morning that the energy price cap will rise in April to £1,971 – an increase of £693 for the average household. Without government action, this would be incredibly tough for millions of hardworking families. So the government is going to step in to directly help people manage those extra costs.
Mr Speaker,
Before I set out the steps we are taking, let me explain what’s happening to energy prices, and why.
People’s energy bills are rising because it is more expensive for the companies who supply our energy to buy oil, coal, and gas.
Of the £693 increase in the April price cap, around 80% comes from wholesale energy prices.
Over the last year, the price of gas alone has quadrupled.
And because over 85% of homes in Britain are heated with a gas boiler, and around 40% of our electricity comes from gas, this is hitting households hard.
The reasons gas prices are soaring are global.
Across Europe and Asia, a long, cold winter last year depleted gas stores.
Disruption to other energy sources like nuclear and wind left us relying more than usual on gas during the summer months.
Surging demand in the world’s manufacturing centres in Asia…
… at the same time as countries like China are moving away from coal…
… is further increasing demand for gas.
And concerns about a possible Russian incursion into Ukraine are putting further pressure on wholesale gas markets.
And so prices are rising.
Mr Speaker,
The price cap has meant that the impact of soaring gas prices has so far fallen mainly on energy companies.
So much so, that some suppliers who couldn’t afford to meet those extra costs have gone out of business as a result.
It is not sustainable to keep holding the price of energy artificially low.
For me to stand here and pretend we don’t have to adjust to paying higher prices would be wrong and dishonest. But what we can do is take the sting out of a significant price shock for millions of families … by making sure the increase in prices is smaller initially and spread over a longer period.
Mr Speaker,
Without government intervention, the increase in the price cap would leave the average household having to find an extra £693.
The actions I’m announcing today will provide, to the vast majority of households, just over half that amount – £350.
In total, the government is going to help around 28 million households this year.
Taken together, this is a plan to help with the cost of living worth around £9bn.
We’re delivering that support in three different ways.
First, we will spread the worst of the extra costs of this year’s energy price shock over time.
This year, all domestic electricity customers will receive an upfront discount on their bills worth £200.
Energy suppliers will apply the discount on people’s bills from October.
With the government meeting the cost in full.
That discount will be automatically repaid from people’s bills in equal £40 instalments over the next five years.
This is the right way to support people while staying on track with our plans to repair the public finances.
And because we are taking a fiscally responsible approach, we can also provide more help, faster, to those who need it most – the second part of our plan.
We’re going to give people a £150 Council Tax rebate to help with the cost of energy, in April – and this discount won’t need to be repaid.
And I do want to be clear with the House that we are deliberately not just giving support to people on benefits.
Lots of people on middle incomes are struggling right now, too – so I’ve decided to provide the council tax rebate to households in Bands A to D.
This means around 80% of all homes in England will benefit.
And the third part of our plan will provide local authorities with a discretionary fund of nearly £150m…
… to help those lower income households who happen to live in higher Council Tax properties…
… and households in bands A-D who are exempt from Council Tax.
We’re also confirming today that we’ll go ahead with existing plans to expand eligibility for the Warm Home Discount by almost a third…
… so that 3m vulnerable households will now benefit from that scheme.
And that’s not all we’re doing to help vulnerable households.
We’re providing £3bn over this Parliament to help more than half a million lower income homes become more energy efficient, saving them on average £290 per year.
Increasing the National Living Wage to £9.50 an hour in April, a pay rise of over £1,000 for 2 million low paid workers.
And providing an effective tax cut for those on Universal Credit, allowing almost 2 million households to keep an average of £1,000 per year.
The payment through energy suppliers will apply across England, Wales and Scotland.
Energy policy is devolved in Northern Ireland, with a different regulator, and the government does not have the legal powers to intervene.
So we will make sure the Executive is funded to do something similar, with around £150m for Northern Ireland through the Barnett formula next year.
And because the Council Tax system is England only, total Barnett consequentials of around £565m will be provided to the devolved administrations in the usual way.
Mr Speaker,
I know that some in this House have argued for a VAT cut on energy.
However, that policy would disproportionately benefit wealthier households.
There would also be no guarantee that suppliers would pass on the discounts to all customers.
And we should be honest with ourselves: this would become a permanent Government subsidy on everyone’s bills.
A permanent subsidy worth £2.5 billion every year – at a time when we are trying to rebuild the public finances.
Instead, our plan allows us to provide more generous support, faster, to those who need it most, providing 28m households with at least £200, and the vast majority receiving £350.
It is fair, it is targeted, it is proportionate – it is the right way to help people with the spike in energy costs.
Mr Speaker,
Today’s announcements are just one part of the government’s plan to tackle this country’s most pressing economic challenges.
A plan for growth – with record investments in infrastructure, innovation and skills.
A plan to restore the public finances – with debt falling by the end of this Parliament.
A plan to cut waiting lists and back the NHS with £29bn over three years and a permanent new source of funding.
And, with the measures I’ve announced today – a plan to help with the rising cost of energy with £350 more in the pockets of tens of millions of hard working families.
That’s our plan to build a stronger economy – not just today but for the long term.
And I commend it to this House.
Commenting on the energy cap rise, interest rate rise and the Chancellor’s measures to address the cost of living crisis, TUC General Secretary Frances O’Grady said: “The Chancellor’s announcement is hopelessly inadequate. For most families it’s just £7 a week and more than half must be paid back.
“It’s too little, it’s poorly targeted, and it’s stop gap measures instead of fixing the big problems.
“Britain needs a pay rise. The best way to help families is to get wages growing again. But this government has no plan to end pay misery.
“Ministers should be getting urgent help to families that need it most through raising universal credit. And we need a windfall tax on the excessive profits from North Sea gas to cut bills and boost investment in affordable energy.”
Responding to today’s announcements on energy costs and the cost of living, Katie Schmuecker, Deputy Director of Policy and Partnerships for the independent Joseph Rowntree Foundation said: “The Chancellor has offered cold comfort to families in poverty, who are already rationing what they can spend on essentials such as heating and food.
“These families are now expected to find at least half of the eye watering increases in energy bills, when many are already getting into debt to keep their houses warm and food on the table.
“Three quarters of those who can claim the enhanced support are not in poverty. Meanwhile inflation is set to rise at more than double the rate of benefits. This support will not get people through the next few months and it will not protect those most at risk of hardship.
“People in poverty are hit hardest by all these pressures because our social security system is simply not offering adequate support, and until that changes they will continue to be exposed to every economic shock.
“The Chancellor has made his choice, the harder choices will now be coming for those who still can’t afford essentials for themselves and their families.”
University of Birmingham’s Harriet Thomson on the rise of energy price caps: “This news comes at a time when families across Great Britain have already been facing years of rapidly increasing energy prices, as well as chaotic energy market conditions with the collapse of around 20 energy supplies since January 2021 alone.
“Just last month, ONS data found that 2 in 3 adults said their costs of living had gone up in the past month, with 79% of those attributing blame to gas and electricity prices.
“We know from the extensive body of existing evidence on this topic that lower income households will be disproportionately hit by the price cap increase, risking pushing millions more into a situation fuel poverty.
“This will have serious consequences for physical and mental health, social isolation, and educational attainment, with households forced to make difficult everyday decisions over whether to ‘heat or eat’.
“Moreover, these price increases are likely to push more people into using risky and/or polluting alternative energy sources, such as DIY candle heaters that have been linked to house fires, burning scrap wood and other flammable materials, and digging up peat. As well as the obvious risks to human life, these approaches will also exacerbate climate change.
“It’s clear that energy companies are reeling from the potent combination of cash flow reductions due to pandemic-related economic pressures on families who are building up more energy debt, and the global gas crisis.
“But the answer is not to burden households with yet more costs. The energy market is broken and needs radical reform – now is the time for the UK government to show ambition and commitment to the nation by investing in deep retrofits of our old and leaky housing stock, and to rollout decentralised renewable energy systems at scale.”
Disabled people are now able to access a new advocacy service to get help applying for Scottish social security benefits.
The support is available to disabled people applying for any of Social Security Scotland’s current and future benefits including Child Disability Payment and Adult Disability Payment.
It also covers advocacy support for disabled people to access payments for families with children, people who need help to pay for a funeral, carers and young people entering the workplace.
This service will be delivered by the charity VoiceAbility and is entirely independent of the Scottish Government and Social Security Scotland.
The Scottish Government has committed up to £20.4 million over the next four years to the provision of the new Independent Advocacy Service.
To enable them to deliver this service, VoiceAbility will create up to 100 new advocacy jobs across the country over the next four years, with a head office and dedicated training centre in Glasgow.
Minister for Social Security Ben Macpherson said: “Accessing social security is a human right and we have an obligation to do what we can to make sure disabled people are able to get the help they need to access financial support they are entitled to.
“This is why we are investing in an independent and free advocacy service for disabled people who need support to engage with us. This new service will help disabled people be aware of their rights, express themselves and feel understood when applying for Scottish social security benefits.
“The service, which is unique to Scotland, is just one of the ways that we’ve responded to what people have told us they want from our new social security system. It is all part of our work to make sure people applying for benefits have a positive experience and find it straightforward and simple no matter what their individual circumstances are.
“Our system is designed to adapt to an individual’s needs rather than expecting them to adapt to access it and we start from a position of trust. I am delighted this new independent service is available to disabled people, it highlights how we are ensuring our social security system is based on dignity, fairness and respect.”
Chief Executive of VoiceAbility Jonathan Senker said: “We are proud to have established a new base in Scotland to provide this Independent Advocacy Service. Our team of skilled advocates will cover the length and breadth of Scotland to provide bespoke support to disabled people to apply for benefits from Social Security Scotland.
“The advocacy we provide will support disabled people to make sure their voices are heard when it matters most and will mean that more people know and understand their rights when applying for Social Security Scotland benefits. We are excited about the difference this service will make to disabled people.”
VoiceAbility is a charity with 40 years’ experience in delivering independent advocacy services
the service will provide free and independent advocacy to anyone who identifies as disabled and requires support to communicate. This may include people with a sensory disability, mental health condition or learning disability
people can access this support by contacting VoiceAbility directly for free on 0300 303 1660 or by visiting voiceability.org
people can also access this support by calling Social Security Scotland for free on 0800 182 2222 and asking to be referred to the Independent Advocacy Service.
Families on low incomes are facing a worrying winter ahead as today’s figures show inflation has hit 5.1%. The rising cost of utilities are especially challenging given they take up such a large share of low-income families’ budgets.
The Government recently announced that benefits will be uprated by 3.1% in April which will close some of the growing gap between people’s incomes and their costs. However, this does not address the immediate hardship families are experiencing this winter.
In October, the Office for Budget Responsibility projected inflation to peak at 4.4% by April but today’s 5.1% exceeds that level.
New JRF analysis based on OBR forecasts shows that should inflation be 4.4% by next April:
Around 100,000 individuals are at risk of falling into deep poverty (below 50% of median income after housing costs) due to benefit uprating being less than inflation in April
Around 7 in 10 of whom live in households that contain children
Around half live in working households
Given today’s high inflation figures, this could be an underestimate and even more individuals may be at risk of deep poverty.
The outlook is especially stark for people who are out of work and reliant on social security to make ends meet. These families have already experienced a £20-a-week cut to Universal Credit. This also comes after a decade of cuts and freezes to social security which has left the system wholly unable to provide the support millions of people need.
Katie Schmuecker, Deputy Director of Policy & Partnerships at the Joseph Rowntree Foundation, said:“It is deeply concerning that families on low incomes, who are already struggling to make their budgets stretch, are at risk of being pulled deeper into poverty. Prices are rising sharply and support available to people is inadequate.
“Everyone in our country should be able to afford the basics yet there is no sign of any respite on the horizon for families struggling to keep their heads above water. Too many people who are being hit by rising energy bills and increasing food prices are forced to ask themselves what essentials they will go without this winter.
“In a country like ours, social security should, at a bare minimum, enable people to meet their needs with dignity. Unless the Government urgently strengthens support, we will see more and more people being pulled deeper into poverty and debt in the months ahead. This is not only harmful but also completely avoidable.”
Alternating Mondays, 1-3pm: Edinburgh Food Project, Pilton food bank at St Margaret Mary, Boswall Pkwy, EH5 2JQ – from 16 January
