Select committee: Treasury Committee

Eighth Report - Autumn Statement 2022 – Cost of living payments

HC 740 Published 14 December 2022

Treasury Committee Autumn 2022 Fiscal Events Report on parliament.uk ↗

At a glance1 recommendation and 3 conclusions · Government response published 27 February 2023 (deadline 14 February 2023)

The government's response

Summary written by Accountability Index from the government's response. It is not the government's own words.

The Government declines to adopt the Committee's recommendation to mirror the Energy Bill Support Scheme payments model, while setting out that it has already moved to three means-tested Cost of Living Payments in 2023-24 and provides existing analysis in place of some further analysis requested.

On more payments, the Government says it "did consider" more lump sums and announced on 3 January 2023 that the £900 payment for means-tested benefit claimants will be delivered in three payments (Spring 2023, Autumn 2023 and Spring 2024).
It does not accept monthly payments, saying DWP's 'Ad Hoc Payment System' makes it "not possible" to pay monthly for six months "without compromising delivery of DWP’s core benefits".
On analysis of the Household Support Fund's impact, it says this is "not possible" in the distributional analysis because Management Information lacks sufficient detail, but HM Treasury "will consider what data becomes available" as a matter of routine.
On work incentives, it says qualifying dates will be announced after they have passed, to "deter fraud and to mitigate risks to work incentives", and that a taper would be "extremely complex and potentially costly".

Read the government's response ↗ Report an error

What the committee recommended 4

2
The Government provision of additional support to those on low incomes through one-off payments presents... Conclusion · paragraph 22
3
We recommend that the Government consider a greater number of lump-sum payments than the two... Recommendation · paragraph 23
4
We would also welcome analysis from the Treasury of: • the work disincentive effects of... Conclusion · paragraph 24
5
Cliff-edges remain present elsewhere. Conclusion · paragraph 25

Sources

Eighth Report - Autumn Statement 2022 – Cost of living payments ↗The committee's report, HC 740, parliament.uk
Fourth Special Report - Autumn Statement 2022 – Cost of living payments: Government response to the Committee’s Eighth Report ↗The government's response, 27 February 2023, parliament.uk

Recommendations and conclusions 4

2
The Government provision of additional support to those on low incomes through one-off payments presents... Conclusion · paragraph 22 · addressed to HM Treasury Conclusion (the committee's words)
The Government provision of additional support to those on low incomes through one-off payments presents a problem of cliff-edges to that support. If someone doesn’t match the criteria required of the means-tested benefits, both in terms of income and the time they are being assessed for eligibility, they will not receive this significant lump sum support when a very similar household may do so. That appears unfair. It may also create a disincentive to work, as it may be in someone’s interests to reduce their hours at key periods to ensure their eligibility for the benefit at the required time.
3
We recommend that the Government consider a greater number of lump-sum payments than the two... Recommendation · paragraph 23 · addressed to HM Treasury Recommendation (the committee's words)
We recommend that the Government consider a greater number of lump-sum payments than the two in 2022–23, which would better ensure that more households have support at the time of their greatest need, and would reduce the severity of the disincentives to work within each relevant assessment period. We recommend mirroring the payments model used in the Energy Bill Support Scheme—a payment each month for six months—which provided regular help over the colder winter period.
4
We would also welcome analysis from the Treasury of: • the work disincentive effects of... Conclusion · paragraph 24 · addressed to HM Treasury Conclusion (the committee's words)
We would also welcome analysis from the Treasury of: • the work disincentive effects of different sizes and frequencies of lump sum payments, and • whether a taper might better incentivise work as part of any subsequent payments from 2024–25.
5
Cliff-edges remain present elsewhere. Conclusion · paragraph 25 · addressed to HM Treasury Conclusion (the committee's words)
Cliff-edges remain present elsewhere. Certain income levels also attract unusually high marginal tax rates or the loss of means-tested entitlements. Such features are distortionary. The Treasury should endeavour to smooth them wherever possible, in areas of its own responsibility, and when considering funding requests from departments. We will return to this issue in future.