As cost of living support ends, people still can't afford life's essentials

Cost of living payments have filled some of the gap between basic benefits and the cost of life’s essentials, while the Household Support Fund has reinvigorated local crisis support. But 22 February 2024 marks the last cost of living payments being sent out. These cash top-ups have gone to people on means-tested benefits, disability benefits and pensioners at regular intervals throughout the cost of living crisis. A few weeks later, on 31 March, the Household Support Fund is due to come to an end. This £1 billion per year fund has bolstered the system of local emergency and crisis support since the height of the pandemic, helping families facing hunger, hardship and unexpected costs to access support locally.

Withdrawing this support would seem to indicate the Government thinks the cost-of-living crisis is over. But it is not.

A widening gulf

The cost of living crisis has created a gulf between what people can afford and what they need, despite the cost of living support that was put in place.

Energy prices began rising fast in April 2021, and were quickly followed by rising food prices, by January 2024 they had risen 75% and 30% respectively. By comparison, benefits lagged way behind, rising just 13.5% over the same period. This pressure has been further intensified by the fact that these essentials make up a bigger share of low-income household spending compared to better off households. Debt and hardship has built up over this time.

But this isn’t simply a cost of living problem. The last two decades have seen poverty become more severe, with more people experiencing deeper forms of poverty and growing numbers unable to meet their most basic physical need to be warm, dry, clean and fed.

A sluggish economy, high housing costs, and a series of cuts and freezes to social security have been major drivers of this trend. The basic rate of Universal Credit currently falls £35 per week short of what a single person needs to afford life’s essentials such as food, household bills and basic toiletries and cleaning products.

Cost of living support offered temporary respite

The cost of living payments have prevented a bad situation being even worse. In 2023/24 they amounted to £900 over the course of the year for working-age recipients of means-tested benefits who are not disabled. For a single person, this closed around half of the gap to affording life’s essentials. They provided some temporary respite, with foodbanks and advice services seeing demand fall for a few weeks after payments went out, before picking up again where they left off.

Similarly, the Household Support Fund has served to prop up an ailing system of local crisis and emergency support. In England, local authorities had pared back local welfare assistance to such an extent that by 2022, 35 areas had no scheme whatsoever. The Household Support Fund has served to top up local funds for cash and in-kind help to households facing a crisis, and provide funding to the voluntary and community sector organisations providing support to people facing hardship. But a survey of local authorities found more than 6 in 10 respondents (62%) would not be able to provide additional discretionary funding to replace what is lost by the Household Support Fund ending, despite three quarters expecting financial hardship would grow in their area over the next 12 months.

Withdrawing this cost of living support now, without any clear plan for what follows, will see hardship deepen further.

We need to move from stop-gaps to solutions

What we need is a system that is there for any one of us when we fall on hard times – and the upcoming Budget must begin building it.

That means inserting an ‘essentials guarantee’ into Universal Credit – a protected minimum amount of support that is linked to what is needed to afford essentials such as food and household bills. The Budget could begin to lay the groundwork for this, committing to the principle that Universal Credit should enable you to afford life’s essentials, and establishing an independent process to recommend a level for an essentials guarantee.

But even with a more adequate social security system people will still hit moments of crisis in their lives, which is where local welfare assistance comes in.

It is essential that the Household Support Fund is extended at the Budget, becoming a permanent part of the system with local authorities given funding certainty for three years at a time. That will enable them and their partners to make a strategic assessment of local need, and build partnerships to address hardship in their communities through cash-first help for individuals and families and funding for organisations to provide practical help and support.

Cost of living support may be receding but the tide of people not being able to afford life’s essentials is not. It is time we moved from stop-gaps to sustainable solutions.