Rishi Sunak’s energy bill support will hand wealthy pensioners £850 they may not need while low-income families are away, new analysis has shown.
A £15billion grant package unveiled by the Chancellor on Thursday will deliver ‘rough justice’ to some groups, the Resolution Foundation has said.
The think tank said the biggest winners are wealthy retirees, while larger families will see their bills rise the most but still receive the same lump sum payment.
Mr Sunak announced a £400 reduction in the energy bill for every household in the UK as well as additional targeted support for pensioners, who will receive an additional £300. This is on top of a £150 council tax rebate announced earlier this year.
People receiving disability benefits will get an additional £150 and people on other means-tested benefits like Universal Credit will get £650.
The Resolution Foundation said the measures were “bold and well targeted”, but said some most needy groups will see the cost of living rise faster than others.
A low-income family with three or more children will see their energy bills rise by £500 more a year than those without children, but are in line to receive the same amount of state aid.
Larger low-income families are more likely than others to live in poverty, in part because of a two-child limit on claiming benefits, introduced in 2014.
The foundation said the increased benefit amount would have helped large families more and cost £1billion less.
The government rejected this approach, in part because it insisted that any financial support remain temporary.
Paul Johnson, director of the Institute for Fiscal Studies, warned that there are likely to be further calls for help next year as energy prices are expected to remain high.
“I think the biggest risk is that the chancellor will be tempted to do it over and over again, and I think if that happens we could really be in for some trouble,” IFS director Paul Johnson said. at the BBC. Today program.
“He has the most extraordinarily difficult decisions to make later this year on public sector wages and then he will be under pressure, I suspect again this time next year when energy prices are still high. .
“I think if he’s tempted to continue investing in an economy where inflation is very high, that becomes a significant risk.”
Mike Brewer, chief economist at the Resolution Foundation, welcomed the government’s support package but said households would still feel a “tight squeeze” in the cost of living this year.
“The biggest winners from yesterday’s package are wealthy pensioners who may not need extra support but can still earn £850, while large families on low incomes may feel rough justice because their higher energy consumption is not reflected in a fixed lump sum. Payments.
“Critically, as well as providing vital support to households this winter, the Chancellor has confirmed that he will go ahead with what is expected to be the biggest increase in benefits in more than three decades, as they are expected to increase by more than 9% next spring.
“This will provide lasting protection for the poorest households against today’s high inflation.”
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This notice was published: 2022-05-27 11:30:02