Britain’s New Aid Plan Is Fraction of Expiring Covid Bazooka
The U.K. government announced a 500 million-pound ($672 million) program 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 programs that funneled almost 80 billion pounds to consumers during the height of the coronavirus crisis. Prime Minister Boris Johnson’s Conservative government has come under increasing pressure from the party’s own rank-and-file lawmakers and opposition parties to help the poorest people as the demands on household budgets grow.
But the new plan, first reported late Wednesday by Bloomberg, is a fraction of the larger programs 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 on Thursday in a statement.
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 members of Parliament 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 Oct. 1. Cutting the furlough program 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 on Thursday. The Covid-19 local support grants and a predecessor program last winter, have paid out more than 425 million pounds 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 program that’s supported more than 11 million jobs throughout the pandemic, and the 20-pound-a-week uplift to universal credit benefit payments to unemployed and low-wage Britons, The chancellor argues it’s 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 Oct. 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 in a statement released Thursday. “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 Oct. 1, adding 139 pounds 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 pounds a week poorer from next month, 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 pounds a week, it estimates.
©2021 Bloomberg L.P.