The payment is going out to people on several means-tested benefits in three instalments of around £300 over the coming financial year, with the first instalment in Spring 2023. Universal Credit claimants are also worse off in real terms despite the payment, a think tank has warned.
The Institute for Fiscal Studies (IFS) has published a report claiming 820,000 people will miss out on the £900 cost of living payment.
The report stated: “Receipt of each of the three £300 instalments of the payment will be contingent on having been a Universal Credit recipient in a specific prior month.
“We estimate that, as a result, in each of the three relevant months there will be around 825,000 people who earn slightly more than is consistent with Universal Credit eligibility and who, as a result of missing out on the cost of living payment, end up with less income than other similar people who earn less. Equivalently, they could increase their own income were their earnings to be slightly lower.”
Government guidance about the payment issued earlier this month states “qualifying periods for eligibility will be announced in due course”.
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The analysts said in their report: “Astonishingly, it is not until April 2025 that benefit rates are set to recover the ground they lost over the autumn and winter of 2021 due to lags in uprating them with inflation.”
Britons on the lowest incomes are almost three times as exposed to mounting energy costs as those on the highest incomes, the group said.
IFS research economist, Sam Ray-Chaudhuri, said: “Income from the state is typically price-indexed, or better.
“One might, therefore, have thought that those who get income from the state would be much more comprehensively protected from the spike in inflation than other groups.
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“But that would be to oversimplify considerably, because benefits are increased in line with out-of-date inflation measures.
“The introduction of Universal Credit offered an opportunity to rectify this administrative anachronism, but it has not been taken.
“It was clear as soon as inflation surged in Autumn 2021 that deficiencies in benefit uprating procedures, if not remedied, were going to cause problems for claimants and policy headaches for the Government.
“It is high time that the Government got ahead of this entirely foreseeable problem, and brought its way of price-indexing benefits into the 21st century.”
The group said almost half of families with three or more children on means-tested benefits would be better off if the cost of living payments had not been introduced.
People on means-tested benefits, including Universal Credit, received a similar cost of living payment over the past tax year. The £650 payments were made in two instalments.
A Department for Work and Pensions spokesperson said: “This year we are increasing benefits and the state pension in line with September’s inflation rate of 10.1 percent, but we recognise the pressures of the rising cost of living, which is why we also delivered £1,200 of direct, targeted support to millions of vulnerable households last year, and will be providing a further £1,350 of support in 2023-24.”
Universal Credit payments are increasing by 10.1 percent in April along with several other benefits, including PIP and Pension Credit.
