Millions of households across the UK will benefit from a new £15 billion package of support to help mitigate the rising cost of living.
Chancellor Rishi Sunak unveiled the emergency measures on Thursday (26 May) and said the government “will not sit idly by” while people are struggling.
The new support package is targeted towards millions of low-income households and will bring the total cost of living support to £37 billion this year.
To help pay for the extra support a new temporary 25% Energy Profits Levy will be introduced for oil and gas companies, reflecting their extraordinary profits.
The levy will also include a new 80% investment allowance to increase the incentive to inves, with the Chancellor saying this “balanced approach allows the government to deliver support to families, while encouraging investment and growth”.
Mr Sunak said: “We have a collective responsibility to help those who are paying the highest price for the high inflation we face.
“That is why I’m targeting this significant support to millions of the most vulnerable people in our society. I said we would stand by people and that is what this support does today.
“It is also right that those companies making extraordinary profits on the back of record global oil and gas prices contribute towards this.
“That is why I’m introducing a temporary Energy Profits Levy to help pay for this unprecedented support in a way that promotes investment.”
How much will I get from the cost of living support package?
The support package includes targeted support for the poorest, the elderly and the disabled, as well as a universal payment that will benefit all UK households.
Listed is a breakdown of the costs for various groups and how much people are set to benefit.
Every UK household
All UK households will receive a £400 grant in October to ease the cost of spiralling energy bills.
Mr Sunak said the universal support is being doubled from £200 to £400, and the requirement to pay it back will be scrapped. This means households will receive a £400 discount on their energy bills from October.
The grant will be partly funded by a £5 billion windfall tax on oil and gas giants.
A cost of living payment of £300 will be given to more than eight million pensioner households in November and December, alongside the Winter Fuel Payment.
The payment will be made directly to households in the same way they receive the winter fuel allowance.
Combined with an additional discount on energy bills, pensioners are at least £500 better off and could receive a total of £850 in support this year, if they qualified for the council tax rebate announced earlier in 2022.
A one-off £650 payment will be made to more than eight million low-income households on means-tested benefits.
It will apply to households on Universal Credit, Tax Credits, Pension Credit and legacy benefits, with separate one-off payments of £300 to pensioner households and £150 to individuals receiving disability benefits – the groups most vulnerable to rising prices.
The Department for Work and Pensions will make the payment in two lump sums directly into claimants bank accounts, with the first paid from July and the second in autumn.
Payments from HMRC for those on tax credits only will follow shortly afterwards.
The new Cost of Living Support package will mean that almost all of the eight million most vulnerable households will receive at least £1,200 of extra support this year, including the £150 council tax rebate that many families received last month – equal to the average energy price cap rise over this year.
People on disability allowance
Six million people on disability allowance will receive a one off payment of £150 in September.
The direct cash payment will help one third of households and will cost the government £9 billion.
Household Support Fund
Mr Sunak also announced a £500 million increase for the Household Support Fund, delivered by councils to distribute in the form of supermarket vouchers and more to help with rising costs.
This brings the total Household Support Fund to £1.5 billion.
MoneySavingExpert Martin Lewis praised the announcement from the Chancellor, saying in a TikTok video: “It’s a pretty good package, and it’s probably better than I expected it to be.
“I’m breathing a sigh of relief because it will relieve some of the pressure.”
He added: "If we look at it in the big picture then the £1,500 cost increase will see homes on Universal credit that also have disabilities getting £12,000, for homes on Universal credit and other benefits without disabilities it’s £950.
"For pensioner homes it’s £700 extra and all homes, it’s £400 towards the costs."