Documents to download

On 5 July 2022 there will be an Estimates Day debate on the spending of the Department for Work and Pensions (DWP) on the cost of living measures.

These subjects were selected by the Backbench Business Committee and were proposed by the Chair of the Work and Pensions committee, Sir Stephen Timms MP.

Rising Cost of living

The Library briefing Rising cost of living in the UK provides information and statistics on increased living costs in the UK.

Inflation has been rising since early 2021. Consumer prices, as measured by the Consumer Prices Index (CPI), were 9.1% higher in May 2022 than a year before – the highest recorded inflation rate since CPI records began in 1989, with the ONS estimating that it is higher than at any time since 1982.

In mid-June, the Bank of England’s Monetary Policy Committee said it expected inflation to “rise to slightly above 11% in October”.

88% of adults in Great Britain reported an increase in their cost of living in June 2022. 60% of adults reported spending less on non-essentials in June, with three-quarters saying they were worried about increases in the cost of living. 

A new package of one-off cost of living support measures was announced by the Chancellor in an Economy Update on 26 May 2022. This followed earlier support packages announced in February and the March Spring Statement.

Details of the package are outlined in an HM Treasury Cost of living support factsheet. As this explains, there are five different elements. One of these is an expansion of the previously announced Energy Bills Support Scheme. The rest are largely delivered or overseen by the Department for Work and Pensions.

Two of these support measures are additional payments made by the DWP (as well as HMRC and the Ministry of Defence) to recipients of particular benefits, provided for by the Social Security (Additional Payments) Act 2022, which received Royal Assent on 28 June 2022. The Government has called these “Cost of Living Payments”. Detail on these payments can be found in the Commons Library briefing on The Social Security (Additional Payments) Bill 2022-23

The Resolution Foundation say that taken together, the Government’s 2022/23 policy changes are progressive and estimate that households in the lowest fifth of incomes will gain on average £1,195, compared to a gain of £799 for households in the middle fifth and a loss of £456 for households in the top fifth.

The Estimates

One of Parliament’s longest standing functions is the consideration and authorisation of the government’s spending plans, requiring the government to obtain parliamentary consent before spending public money.

Main Estimates are the documents that contain the detail of those spending plans for a particular year. There is a separate Estimate for each government department. Changes are presented at the end of each year through Supplementary Estimates. Each of the Estimates must be authorised by parliament before they take effect.

DWP’s spending plans

The vast majority of the Department for Work and Pension’s spending is on benefits and state pensions, which lies within Resource Annually Managed Expenditure (not subject to pre-set limits set in Spending Reviews). The budget sought for this spending in 2022-23, based on DWP and Office for Budget Responsibility (OBR) assumptions, is £230,862.6 million, 6.3% (£13,693.3 million) above the latest forecast for 2020-21 of £217,169.3 million.

The first version of the Main Estimates included a benefits and state pensions Resource AME increase of £5,476.4 million from the Supplementary Estimate position. Following the inclusion of the cost-of-living measures, an additional £8,216.9 million has been added to the Resource AME allocation, giving a total increase on the 2021-22 position of £13,693.3 million.

Further detail on this and other areas of DWP spending are provided in the full briefing.

Documents to download

Related posts