‘Rough justice’: Sunak hands wealthy pensioners £850 while poor families lose out, analysis shows

Increasing benefit payments would have been cheaper and may have been fairer, says think tank

Ben Chapman
Friday 27 May 2022 17:31
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Sunak defends energy bill rebate going to richer households

Rishi Sunak’s energy bills support will hand wealthy pensioners £850 that they may not need while low-income families miss out, new analysis has shown.

A £15bn package of grants unveiled by the chancellor on Thursday will deal out “rough justice” to some groups, the Resolution Foundation said.

The think tank said that the biggest winners are wealthy pensioners, while larger families will see their bills rise most steeply but still receive the same flat-rate payment.

Mr Sunak announced a £400 energy bill discount for every household in the UK, as well as targeted help for pensioners, who will receive an additional £300. That is on top of a £150 council tax rebate announced earlier this year.

People in receipt of disability benefits will get a further £150, and households in receipt of other means-tested benefits, such as universal credit, will get £650.

The Resolution Foundation said those measures were “bold and well targeted” but that some groups in the greatest need will see living costs rise faster than others.

A low-income family with three or more children will see their energy bills go up by £500 more per year than a household without children, but are in line to receive the same amount of state support.

Larger families on low incomes are more likely than others to be living in poverty, partly because of a two-child limit to some benefits, introduced in 2014.

The foundation said that uprating the amount paid in benefits would have helped larger families more, and been £1bn cheaper.

The government rejected that approach, in part because it was keen to ensure that any financial support remained temporary.

Paul Johnson, director of the Institute for Fiscal Studies (IFS), warned that there were likely to be renewed calls for help next year because energy prices look set to remain high.

“I think the biggest risk is that the chancellor will be tempted to do this again and again, and I think if that happens then we really could be in for a bit of trouble,” he told the BBC’s Today programme.

“He’s got the most extraordinarily difficult decisions to make later this year on public sector pay, and then he’ll be under pressure, I suspect, again this time next year, when energy prices will still be high.

“I think if he’s tempted to continue putting money into an economy where inflation is very high, then that becomes a significant risk.”

Mike Brewer, chief economist at the Resolution Foundation, praised the government’s support package but said housholds would still feel a “tight squeeze” in living costs this year.

“The biggest winners from yesterday’s package are wealthy pensioners, who may not need extra support but still stand to gain £850, while large families on low incomes may feel rough justice as their higher energy usage isn’t reflected in flat-rate lump-sum payments.

“Critically, as well as providing vital support to households this winter, the chancellor confirmed that he would go ahead with what is set to be the biggest increase in benefits in more than three decades, when they are likely to rise by over 9 per cent next spring.

“This will offer lasting protection for poorer households from today’s high inflation.”

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