Following the Autumn Statement 2022 Policy in Practice welcomes the government’s decision to uprate benefits, pensions and the benefit cap in line with CPI inflation of 10.1%. We also welcome the continuation of the cost of living payments for households on means-tested benefits. Under the circumstances these announced measures are better than expected.
• Autumn Statement 2022: Budget documents
• OBR Economic and Fiscal Outlook
However, we are in exceptionally bad circumstances. With the economy contracting 1.4% next year, some groups may need more targeted support to ensure they can meet their essential costs.
Let’s take a look at the main measures that will affect low-income families.
What the Autumn Statement 2022 will deliver for low income households
- Benefits and pensions will be uprated by 10.1% from April
- The benefit cap will increase for the first time since its introduction in 2013. This will mean a couple will be capped at £25,323 in London and at £22,020 outside of London
- New cost of living payments in 2023: £900 to people on means-tested benefits, £300 to pensioners, and £150 to disability benefits
- Energy Price Guarantee will increase to £3,000 for the average household from April
- National Living Wage (NLW) will increase to £7.49 for people aged 18-20, £10.18 for people 21-22 and £10.42 for people over 22 from April
- £1 billion to extend the Household Support Fund for a further 12 months
- Council Tax rates can rise by as much as 4.99% after being previously capped at 2.99%
1. Benefits and pensions will be uprated by 10.1%
This is the minimum needed to prevent more significant reductions in the disposable income of families on means-tested benefits.
But families will not benefit from the announced changes quickly and waiting until April 2023 won’t help families struggling now. The £20 uplift to Universal Credit during the pandemic showed that benefits can be uprated much sooner if there is political will.
2. Benefit Cap will increase for the first time since its introduction in 2013
Uprating the Benefit Cap is welcome and long overdue; this measure allows households to feel the benefit of uprating. Without this many more households would have had their benefits capped next year.
The impact of the benefit cap being uprated would be strengthened if it was also coupled with the uprating of the Local Housing Allowance. Rising private sector rents will not be covered by increases in housing support.
3. New cost of living payments in 2023
Benefits uprating and the new Cost of Living payments are welcome and needed to offset the rising costs of energy for the lowest income households.
Our analysis ahead of the 1 October Energy Price Guarantee introduction found that flat rate support provides disproportionate levels of support, with smaller households receiving much more per person than larger households and those in energy-inefficient homes missing out.
4. Energy Price Guarantee will increase to £3,000 for the average household
Energy bills will rise by 20% in April as the new Energy Price Guarantee reaches £3,000 for a typical household. Though these are offset for the lowest income households by cost of living payments, it is still a big increase for people not claiming Universal Credit.
5. National Living Wage is rising to £10.42 per hour
For households in work, the 9.7% increase in National Living Wage will boost the income of nearly two million workers. Although those claiming Universal Credit will not see the full increase, as their earnings are withdrawn due to the 55% (the taper rate in Universal Credit) for each pound that they earn.
6. Household Support Fund extended for a further 12 months
The £1 billion Household Support Fund extension will help councils target support to households that are missing out for a further 12 months. This is a welcome measure that can help councils to provide emergency support to struggling households. However, the value of the extension is 10% less next year due to inflation, so it is worth £900m in real terms.
It can also place a considerable administrative burden on people to apply, as they must find out how to apply, navigate the rules of the fund and wait for a decision before they are paid.
We helped 19 local authorities administer £19 million of support targeted to the households that were struggling the most. Read more about our award-winning work to target emergency support in this case study.
7. Council Tax rates can rise by as much as 4.99%
Council Tax can rise by as much as 4.99% after being capped at 2.99%. This ‘flexibility’ will have an unfair impact on low income households, as all but those in boroughs with the most generous Council Tax Support schemes will pay more. In some areas, the poorest households only receive help towards a maximum of 50% of their bill.
The uneven nature of Council Tax, and the complexity of the benefits system, mean households will see different effects on their budgets.
More pressure on household budgets from April 2023
Investment in health and education is necessary to directly improve life outcomes, as well as to reduce future social security spending. However, the protection in investments announced in the Autumn Statement is difficult to separate from past austerity, and people need financial stability at home to benefit.
Social housing tenants will see their rents rise by as much as 7% from April after a 4.1% rise last year, though they will be protected by inflation-linked rises to housing benefit. Private tenants with rents above the Local Housing Allowance (LHA) rate will see no increase in housing support, as LHA rates remain capped at 2020 levels. Private rents for new lets rose between 12% (Zoopla) and 16% (Rightmove) in 2022, with no increase in support for private renters.
Autumn Statement 2022 verdict: Government must still do more to help families with rising costs
We welcome the government’s decision to uprate benefits and the benefit cap in line with inflation, and to extend the cost of living support packages, as announced in the Autumn Statement 2022. However, these are exceptional circumstances, and the government may need to respond quickly to support struggling families.
In our upcoming webinar on Wednesday 23 November we will be covering the Autumn Statement and what it means for different household types. We’ll look at practical actions organisations can take to help families through the current cost of living crisis, with a focus on in-work households.
Practical ways for organisations to support struggling households
Join our free webinar: Building a path out of in-work poverty
Wednesday 23 November from 10:30 to 11:45
With guest speaker Richard Kaufman, Performance and Data Analyst, Haringey Council
Tackling in-work poverty is vital to growing the financial strength of families and helping them to avoid crises. Despite increases to the National Living Wage, levels of poverty within working households continue to rise.
The government promotes work as the best route out of poverty yet this is not always guaranteed. We know that 75% of children growing up in relative poverty live in a household where at least one person works (DWP, 2021).
Analysis by Policy in Practice from 2021 found that a single parent working full-time on the National Living Wage would be worse off by £1,035 a year by April 2022. We have updated our analysis to show where that household would be now, and where they’re likely to be in 2023.
Join this webinar to learn:
- Brand new analysis on how many low-income working families are in relative poverty
- How in-work poverty has risen since the end of the pandemic supports and how it is forecasted to change in 2023
- What practical actions frontline organisations and local authorities can take to support low-income working families
Can’t make the date? Register anyway to automatically receive the recording and slides.
