Cost of Living Payments: Overview and FAQs

Cost of Living Payments were introduced as part of a package of one-off cost of living support measures, announced by the then Chancellor of the Exchequer, Rishi Sunak, on 26 May 2022.

A further set of Cost of Living Payments, to be made to the same groups during 2023/24, was announced in the 17 November 2022 Autumn Statement.

May 2022 cost of living support package

There are five elements to the May cost of living support package. One is an expansion of the previously announced Energy Bills Support Scheme, providing all households with a domestic electricity connection (and/or a domestic electricity meter) with £400 of support towards their energy bills.

The package also includes additional funding to extend the Household Support Fund. This allows local authorities in England to make discretionary payments to people most in need to help towards the rising cost of food, energy, and water bills.

Cost of Living Payments

The remaining support measures in the May cost of living support package provide three additional cash payments from the Department for Work and Pensions (and HM Revenue and Customs and the Ministry of Defence) to recipients of certain benefits or tax credits throughout the UK. These payments consist of:

• a £650 Cost of Living Payment, payable in two instalments, to recipients of certain means-tested benefits including Universal Credit, most of the legacy benefits and tax credits it is replacing (except Housing Benefit), and Pension Credit.
• a £150 Disability Cost of Living Payment for recipients of certain non-means-tested disability benefits, including Personal Independence Payment (PIP) and Attendance Allowance (AA).
• a £300 Pensioner Cost of Living Payment, paid as an addition to the Winter Fuel Payment, to households with at least one person entitled to a Winter Fuel Payment for winter 2022/2023.

The 2023/24 Cost of Living Payments will be made to recipients of the same sets of benefits over the course of the financial year. Qualifying means-tested benefit recipients will receive three payments totalling £900. Disability and Pensioner Cost of Living Payments will remain the same in cash terms as those provided in 2022/23. The Household Support Fund, and related funding for devolved governments, will continue for the whole financial year, unchanged in cash terms since it was first introduced in October 2021.

Recipients and costs

These payments are forecast to cost an estimated £8.8 billion, out of an estimated £15.3 billion for the total May 2022 cost of living support package. The Government estimates that:

• Around 8.2 million households on means-tested benefits and tax credits will receive the £650 Cost of living Payment, at a total cost of £5.4 billion.
• Around 6.3 million people who receive a qualifying disability benefit will receive a one-off £150 Disability Cost of Living Payment, at a total cost of £0.9 billion.
• Over 8 million pensioner households will receive a Pensioner Cost of living Payment of £300 alongside their Winter Fuel Payment in November/December, at a total cost of £2.5 billion.

The payments are not mutually exclusive, so certain households could get all three depending on their circumstances. People who are eligible for a Cost of Living Payment should be paid automatically and do not need to make an application. Payments should be paid to all eligible people in the same was as their qualifying benefit or tax credit.

Guidance and legislation

Further information on the rules governing the Cost of Living Payments, and on the arrangements for paying eligible households and individuals, can be found in:

• HM Treasury, Policy Paper: Cost of living support factsheet: 26 May 2022, updated 15 June 2022
• HM Treasury, Cost of living support Factsheet, updated 21 November 2022
• DWP, Guidance: Cost of Living Payment, updated 3 January 2023
• DWP, Cost of Living Additional Payments 2022, ADM memo 17/22, August 2022
• Commons Library briefing, Social Security (Additional Payments) Bill 2022-23, which gives background to the legislation for two of the Cost of Living Payments, and looks at the impact of the Government’s wider support package.

Further reading

The Commons Library webpage Research on the increasing cost of living and inflation has links to the Library’s wider publications on the rising cost of living in the UK, including the causes of inflation, the effect on households, and Government support.