Written evidence from Bradford Council CLP0060

Q1 To what extent have the cost of living support payments been sufficient at helping eligible households meet the cost of essentials such as food and electricity?

While the cost of living payments have been welcome, they are inadequate for at least three reasons:

•                     First, the level of support was not decided by level of need assessed in relation to actual spending patterns of specific groups. Support does not reflect the full impact of cost of living pressures across the board – energy, food, rent, mortgages, clothing, travel etc. – nor the higher inflation rate experienced by the poorest.  The payments do not guarantee protection around a basic set of household essential consumption needs.  

•                     Second, provision of support to households is flat rate and does not vary with circumstances as benefits do. Factors such as size of household really matter. Large families require a higher income to achieve the same standard of living as a smaller family. On average, large families spend much more on energy bills. For example, the IFS has calculated that half of all families on means tested benefits with three or more children would have been better off if benefits had just been increased in line with inflation as opposed to providing cost of living payments.  The payments are one-offs and future payments uncertain so budgeting becomes very difficult.

•                     Third, eligibility criteria result in cliff edges occurring. Being a UC claimant now brings with it an additional £900 (cost of living payment for 2022/23) and this creates a cliff edge for those who are just over the entitlement level.  The IFS calculates that 825, 000 people who earn slightly more than universal credit entitlement will miss out on the cost of living payment for each of the three payment periods.  They will end up with less income than similar people who earn less. 

Families are already struggling to meet basic needs.  We are experiencing the greatest fall in living standards on modern record: the OBR forecasts a 7% fall in disposable income per capita over the next two years.  The consequences of this will be felt for a long time to come. A long term structural solution is required, built around a social welfare system which guarantees income to meet basic needs.  One-off cost of living payments cannot provide this solution or address the level of basic need.

Q2 What role have the following factors played in access to the cost of living support payments:

a) Passporting: Not already being in receipt of certain means-tested benefits, despite being eligible, and consequentially being prevented from accessing emergency support;

Marginalised and vulnerable groups lose out as do those who have not taken up benefits they are entitled to.

b)  Cliff-edges: Not being in receipt of a certain means-tested benefit, because households failed to meet certain qualifying thresholds.

A person/household with an income £1 above UC eligibility loses access to £900 cost of living payment despite being of almost identical income to someone who just qualifies for UC.   

c)  Qualifying period anomalies: issues relating to the timing of benefit payments;

Due to the way UC is calculated and the assessment date, a fluctuation in income in any given month can result in a temporary loss of eligibility for UC and therefor a loss of access to cost of living payments with a major impact on hardship levels.

d)  Receiving a nil reward on a Universal Credit payment, due to reasons such as sanctioning; or

e)  Any other technicality you believe the Committee should investigate?

Cuts lead to inability to access cost of living payments and impose unnecessary hardship on some of the most vulnerable in our society. The flat rate nature of the cost of living payments means that they do not accommodate for varying household circumstances producing winners and losers among those most in need. For example, families with three or more children fare particularly badly. People on disability benefits also are hit hard.

All of a-d above have affected the reach of the payments and impact especially for some of the most vulnerable groups and for those who are just above benefit thresholds.

Q3. How has the Department’s ad-hoc payment system and its design and use benefitted or limited the delivery of cost of living support? 

This answer takes into account the cost of living payments issued directly by the DWP, funded by the DWP but issued by LAs via the Household Support Grant fund, funded by BEIS and funded by DHLUC. The ad hoc nature of the overall Government’s response to the cost of living crisis has meant that residents are unclear what they are entitled to, how much they will receive, when they will receive it, where from and whether they need to apply or not. Local Authorities have needed to field front line calls from residents unsure about their entitlement to a range of schemes. The uncertainty about when payments would be received can particularly affect those with low level mental health issues. In terms of the Household Support Grant, local authorities have discretion in how the support is applied and the categories of beneficiaries. While LAs welcome the ability to allocate support based on local needs; this does result in residents in neighbouring authorities receiving different levels of support. Uplifting core benefits, for example Universal Credit for the period of the cost of living, as was applied during Covid 19, may have provided greater certainty for claimants combined with regular payments. For example, if we look at the impact on our anti-poverty work through our foodbank network of the two methods of supporting our residents with additional payments regularly through benefits during Covid 19 v ad hoc payments to tackle the cost of living, we are told that Covid 19 payments saw people needing support with food reduced on a consistent basis. The current ad hoc payment approach shows that people use foodbanks in reduced numbers for a couple of weeks after the payment but then there is a rapid increase back to higher numbers approaching the foodbank. This speaks to the sustainability of the impact on the individual being greater from the consistent benefit increase.

Commissioned agencies have raised concerns about those with complex lives and the safeguarding issue raised by receiving lump sum payments. Ad hoc payments for those with addiction issues often means that this money creates a risk of overdose and/or exploitation from coercive others. Agencies have many anecdotal cases of people who have been impacted negatively through this payment approach.

Residents in care homes received the additional payment but the care homes themselves are responsible for paying the fuel bills. Residents in care homes have seen increases in fees and this forms part of their cost-of-living pressure. Some care homes have been asking for residents to transfer the payment to them to cover their increased fuel costs. This has left some residents/families in conflict with care homes – some updated policy guidance could resolve this tension if ad hoc payments are to continue in the future.

Other areas that could be considered are revising eligibility for Free School Meals (e.g. for all those in receipt of Universal Credit) and widening out support for longer term measures such as the insulation of properties such as https://www.gov.uk/government/news/government-joins-with-households-to-help-millions-reduce-their-energy-bills Other beneficial changes are the temporary halt on forced installations of pre-payment meters and plans from July 2023 to fix charges for those on pre-payment meters at the same level as other customers.

Q4. Are there any examples of international best practice in relation to the delivery of emergency cost of living support that the UK can learn from?

Accepting that policy has to adapt to the differing political, economic and welfare contexts of each country, there are still lessons to be learned.  Looking at different approaches emphasises how the generosity and scope of welfare systems really matters. It emphasises how understanding the impact of the cost of living crisis requires understanding the entire “social wage” available to people and how this helps prevent or mitigate the impact of the current cost of living crisis.    

As policy and practice from abroad shows (and the evidence from policy in the pandemic also demonstrates) we could do things differently.   For example, there are different ways of providing and regulating energy markets and supporting energy bills – taxation, regulation, social provision, social tariffs are some of the options that could be explored. The EPG and price caps in and of themselves are broadly regressive.  Housing provision, regulation and support is also a key area.  Support with housing costs is a key component of the cost of living crises. At the very least, the Local Housing Allowance needs review and uprating.  An estimated 70,000 people missed a rent or mortgage payment in April 2023.

In terms of benefits, higher income replacement rates for benefits and higher overall level of benefits would eliminate some of the need for large cost of living payments and some of the limitations inherent in the current payments.  Benefit income levels should be benchmarked against a minimum decent standard of living.  It is better to increase benefits in line with inflation rather than provide one-off cost of living payments. Groups such as large families and those in receipt of disability benefit fare particularly badly from the way in which cost of living payments are delivered.  It is possible to uprate benefits on a monthly basis, in line with inflation, under the current UC system.  Auto enrolment for benefits should be a priority and a review and redesign of the whole sanctions system is required. There is a wealth of research (national and international) which suggests sanctions may not have the effects intended.  Tailored support rather than sanctioning works best.

May 2023

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