Commuters make their way over London Bridge towards the City of London on Thursday, September 30 2021. Picture: BLOOMBERG/CHRIS J RATCLIFFE
Commuters make their way over London Bridge towards the City of London on Thursday, September 30 2021. Picture: BLOOMBERG/CHRIS J RATCLIFFE

London — The UK government has announced a £500m programme of hardship grants to help consumers who are struggling with the rising cost of living over the winter.

The announcement coincides with the expiration of two larger benefit programmes that funnelled almost £80bn to consumers during the height of the coronavirus crisis. Prime Minister Boris Johnson’s Conservative government has come under pressure from the party’s own rank-and-file members and opposition parties to help the poorest people as the demands on household budgets grow.

But the new plan is a fraction of the larger programmes closing in the next week. Those include the furlough granting wage support to those prevented from working during lockdowns
and a temporary boost to universal credit that helps more than 5-million people.

The household support grants will be distributed through local authorities from October and are designed to help vulnerable households to cover the cost of food, clothing and utilities, the department for work and pensions said.

The fund “is here to help those vulnerable households with essential costs as we push through the last stages of our recovery from the pandemic”, work and pensions secretary Therese Coffey said.

Pressure is building from MPs to help poorer Britons with the cost of living. Inflation is set to reach double the Bank of England’s 2% target, fanned by a surge in energy prices that will start hitting bills harder from October 1. Cutting the furlough programme hits the poorest families hardest and economists say will boost unemployment.

The grants come as a similar plan to help vulnerable households through the pandemic comes to an end. The Covid-19 local support grants and a predecessor programme last winter, have paid out more than £425m to help people in need.

Last week, Conservative MPs Christopher Chope and Robert Halfon pushed business secretary Kwasi Kwarteng to help consumers by cutting the value-added sales tax on consumer energy bills. Kwarteng has declined to rule that measure out, saying it was a matter for chancellor of the exchequer Rishi Sunak.

Sunak, for his part, has stood firm on ending both his flagship furlough programme that has supported more than 11-million jobs throughout the pandemic, and the £20-a-week uplift to universal credit benefit payments to unemployed and low-wage Britons, The chancellor argues it is his “sacred” duty to balance the books, and that the measures were only ever intended as temporary ones during the pandemic. Furlough ends on Thursday, and the universal credit uplift on October 6.

“With the recovery well under way, and more than 1-million job vacancies, now is the right time for the scheme to draw to a close,” Sunak said. “But that in no way means the end of our support. Our plan for jobs is helping people into work and making sure they have the skills needed for the jobs of the future.”

Adding to the pressures on household budgets, a price cap on domestic energy bills that protects 15-million households from soaring bills is due to go up 12% on Friday, adding £139 a year to the average bill. 

As a result of the drop in benefits and rise in the cost of living, low income families face being £31 a week poorer from October, according to analysis from the Joseph Rowntree Foundation. From April, the government’s planned tax hike to pay for health and social care will cost them an additional £2.50 a week, it estimates.

Bloomberg News. More stories like this are available on bloomberg.com

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