Source · Select Committees · Work and Pensions Committee
Recommendation 2
2
Accepted
Paragraph: 25
Cost of living payment eligibility creates an unfair "cliff edge" income gap.
Conclusion
We are concerned by the cliff edge nature of the cost of living payments which creates a fundamentally unfair income gap where a person is financially penalised for earning just over the qualifying threshold, being in receipt of a sanction or not receiving an eligible payment during the qualifying period. For example, a person earning just £5 over the qualifying threshold would lose nearly £300 if they are ineligible for a cost of living payment and would be significantly worse off than someone just under the threshold.
Government Response Summary
The government acknowledges the cliff-edge issue but states that delivering payments in three separate instalments reduces the chance of missing out, and highlights the flexible Household Support Fund as an alternative for those ineligible.
Paragraph Reference:
25
Government Response
Accepted
HM Government
Accepted
The Department recognises that there are instances where a person may just miss out on a Cost of Living Payment, whether that is due, for example, to their earnings, capital, or other income, or for a combination of reasons during the qualifying period. However, the Department is delivering the Cost of Living Payment in three separate payments over 2023/2024 to reduce the chance of someone missing out altogether. Those who do not qualify for one instalment of the Cost of Living Payment may qualify for another Payment. Keeping the rules for this policy simple enabled the Department to make over 30 million separate payments for 2022/23 and a further 23 million separate payments, so far, for 2023/24 to support with the cost of living while maintaining core benefit delivery. This includes the clear rule that a claimant must be entitled to at least 1p of a qualifying social security benefit with respect to the qualifying period to receive a Cost of Living Payment. Paying those with financial resources available, which would make them ineligible for means-tested benefits, is not the intention of the Cost of Living Payments which are aimed at those on the lowest incomes. Including those who received no payment of benefit would also involve making Cost of Living Payments to customers who had the payment of their benefit suspended during the qualifying period including those with suspected fraud or where there is a safeguarding risk related to a vulnerable claimant’s appointee. Many of the most vulnerable are those entitled to other elements in UC, such as child costs. If a sanction is applied, claimants continue to receive these other elements and would remain eligible for a Cost of Living Payment. Additionally claimants may still have been found eligible for a Cost of Living Payment if their benefit was reduced to £0 and one of the following applies: money was taken off the benefit for other reasons, such as payments of rent to your landlord or for money owed by the claimant, or because the claimant had a hardship payment because they could not pay for rent, heating, food or hygiene needs. Additionally, the Government is providing total support worth £104bn over 2022–23 and 2024–25 to help households and individuals with rising bills. This includes the additional £1 billion of funding, including Barnett impact, the Government has provided to enable the £842 million extension of the Household Support Fund this financial year until March 2024. The Household Support Fund is intentionally designed to be a flexible scheme to provide support for households most in need, including those not in receipt of benefits or Cost of Living Payments.