403,000 people on benefits excluded from vital £650 cost-of-living payment

·Political Correspondent, Yahoo News UK
·4 min read
File photo dated 26/01/18 of money, as the Government must pause benefits deductions to give struggling households
Around 403,000 Brits are missing out on a £650 cost of living support payment. (PA).

The government has been criticised for not giving a vital cost-of-living support payment to 403,000 people claiming a state benefit.

Critics say the decision to prevent hundreds of thousands of claimants of employment support allowance (ESA) from accessing hundreds of pounds has left some people "falling through the cracks".

In May, former chancellor Rishi Sunak announced a £15bn package of support to help households struggling with the escalating crisis.

On Wednesday, experts warned the average energy bills could reach as high as £500 a month in January.

Among the package of measures was financial support for eight million households on state benefits in the form of a £650 payment paid in instalments – £325 in July, and £325 in the autumn.

Read more: Energy bills: MPs warn £400 discount not enough to mitigate October rise

An additional £150 will also be paid to personal independence payments (PIP) claimants.

However, hundreds of thousands of people on a specific type of employment and support allowance benefit are set to miss out.

There are two types of ESA:

  • Contributory ESA: if you paid enough national insurance contributions when you were working.

  • Income-related ESA: if you have not paid enough national insurance contributions.

Both forms of ESA exist to support those who are out of work or unable to work – including those with disabilities who may need to use more energy as a result.

The cost of food is soaring. (ONS)
UK inflation is at its highest level for decades. (ONS)

However, only those on income-related ESA qualify for the £650 payment – because it is means-tested.

Those claiming contributory-based ESA – which is not means tested – are not eligible, leaving 403,000 people out of pocket.

It comes as experts warn the energy bill price cap is set to surpass £3,500 in October, an over £2,000 increase on October 2021, with inflation expected to hit more than 11% by 2023.

Critics have said the exclusion of contribution-based ESA claimants ahead of this winter's energy bills crisis was "another example of people being left behind" by the government.

Read more: Some renters to miss out on £400 energy discount, experts warn

“While any support during the cost of living crisis is welcome, there are significant gaps in the package that need to be urgently addressed," Simon Francis, End Fuel Poverty Coalition co-ordinator, told Yahoo News UK.

“In addition, with predictions of energy bills rising to astronomical levels by early 2023, the current levels of support will not be enough to help the majority of households in fuel poverty.

“We need a full package of emergency support this winter and a speeding up of plans to improve the energy efficiency of our nation’s buildings.”

Shadow work and pensions secretary Jonathan Ashworth told Yahoo News UK the policy has left people "falling through the cracks".

HANLEY, ENGLAND - JULY 25:  Rishi Sunak and Liz Truss take part in the BBC Leadership debate at Victoria Hall on July 25, 2022 in Hanley, England. Former Chancellor Rishi Sunak and Current Foreign Secretary Liz Truss go head-to-head in the BBC Conservative Leadership debate in their bid to win the contest and become the UK's next Prime Minister. (Photo by Jacob King - WPA Pool/Getty Images)
Rishi Sunak and Liz Truss have come under pressure to address the spiralling cost of living. (BBC/PA)

"After 12 years of failure, they delivered a completely inadequate sticking plaster that means people across the country continue to worry about how they'll make ends meet," said Ashworth.

"Instead of getting people the help they need, they're fighting amongst themselves."

The warnings come as Tory leadership hopefuls Sunak and foreign secretary Liz Truss come under pressure to outline a cost-of-living strategy ahead of a winter crisis.

Truss has pledged to suspend the green levy on energy bills to help with soaring costs – with Sunak saying he would slash VAT on energy bills.

Read more: Rishi Sunak vows to cut VAT on household energy bills

However, experts have warned that cutting tax on energy bills is poorly targeted as it is most likely to benefit those on the highest incomes who use more energy.

On Tuesday, MPs on the cross-party business, energy, and industrial strategy (BEIS) committee urged MPs to introduce a social tariff to help people on the lowest incomes with surging energy costs.

A social tariff could knock more than £1,000 off energy bills for the most vulnerable, with the cost paid for by taxation or by other customers.

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