The post-pandemic cost-of-living crisis continues to make life difficult in Britain this summer – even after some stability has returned to the international energy market and domestic heating bills have fallen after a long winter of sky-high prices.
With inflation stubbornly stuck at 8.7 percent, new problems have arisen for mortgage holders struggling with high interest rates in the form of inflated prices on supermarket shelves. The Office for National Statistics (ONS) put food inflation at 18.4 percent in May.
However, Sainsbury’s chief executive Simon Roberts said he believes levels will soon fall as retail sales rise in response to warmer weather, noting that prices of staples such as bread, butter, milk, pasta and Meat in its supermarket fell in the second quarter of the year in response to more favorable trading conditions.
However, the news that supermarkets are accused of profiting from “rip-off” forecourt fuel prices, which has resulted in motorists paying nearly £1billion over the normal price for petrol and diesel last year, is likely to further demoralize one beleaguered public tired of fighting the economy.
Below we look at the support available to households in August.
Additional support of £1,350 will be paid
Although Rishi Sunak’s Energy Bill Support Scheme expires at the end of March (an initiative that has paid out £400 in monthly installments of £66 and £67), millions of low-income households will receive further living support from the government this year totaling up to at £1,350.
Eight million means-tested beneficiaries, including people on Universal Credit, pension credit and tax credits, will receive £900 in installments under a scheme that started this spring, with the money being paid directly into bank accounts in three tranches by The Department for Labour and Pensions (DWP) said.
There will also be a separate payment of £150 for more than six million disabled people and an additional payment of £300 for over eight million pensioners.
Here are the payment window which have been announced so far, more precise dates are expected later in the year:
- £301 – First cost of living payment – already issued between 25 April and 17 May (or 2-9 May for those with tax credits but no other low-income benefits)
- £150 – Disability benefit – in Summer 2023
- £300 – Second Living Payment – in Autumn 2023
- £300 – pension payment – in winter 2023/2024
- £299 – Third Living Payment – in Spring 2024
A holiday brings with it a change in the payment schedule
The usual government support in the form of welfare payments and pension payments will also end in August, although the start of the summer bank holiday on Monday 28th means anyone expecting their money by that date can usually expect it deposited will be transferred to their bank account one business day earlier (e.g. Friday 25th).
This applies to anyone receiving the following from the DWP in August:
- Universal credit
- State Pension
- pension credit
- Disabled Life Support
- Personal Independence Payment
- attendance fee
- need of care
- Employment Support Grant
- social care
- unemployment benefit
For more information on how and when government benefits are paid, see Government website.
The energy price guarantee has expired as the cap has been lowered
The muggy weather we can expect to see into August – which already brought with it the warmest June on record in 1884 – may not be comfortable for everyone, but at least the need to turn on the central heating will be what as such has proven to significantly reduce an issue over the winter is simply eliminated.
The Government’s Energy Price Guarantee (EPG), which Liz Truss introduced last September to ensure households pay no more than £2,500 for their electricity and gas, with the Government paying the balance due to suppliers under the Energy Price Cap (EPC) owed by Ofgem, subsidized, was extended by Chancellor Jeremy Hunt in his March 15 budget for a further three months.
Mr Hunt had reportedly been tempted to increase the EPG to £3,000, a far less generous offer that would have exonerated the state, but ultimately changed his mind and extended the guarantee to April, May and June.
Now that the EPG has finally expired, consumers will once again have to pay the EPC rate, which Ofgem has set at £2,074 for the third quarter from 1 July, a significant drop from the £3,280 set in the second quarter intervention of the overriding guarantee of the state.
That 17 percent fall reflects the recent fall in wholesale energy prices – the amount energy companies pay for electricity and gas before they deliver it to homes – and while that’s a significant drop from the stunning prices of the past two years, it is the number remains more than £1,000 a year above pre-pandemic levels.
What could happen next, consultancy Cornwall Insight predicts the fall in July will be followed by another fall in October, when the typical annual bill is expected to be £1,976.
Unfortunately, the typical bill is then expected to rise again to £2,045 in January 2024 and Cornwall does not expect energy prices to return to pre-coronavirus levels until the end of the decade at the earliest.
Customers were also warned that prices remain subject to wholesale market volatility as the UK’s reliance on imported energy means geopolitical events such as the war in Ukraine could continue to have a negative impact.