Lowest income Welsh households to receive the largest share of funding from the cost of living response

The Welsh Government has published analysis estimating the distributional effects of its immediate response to the cost of living crisis – through the Winter Fuel Support Scheme, Discretionary Assistance Funds, and the Cost of Living payment.

The schemes in Wales mean that many households with the lowest incomes in Wales will be able to receive payments of £350, with some entitled to further financial support from the Discretionary Assistance Fund.

The analysis shows that the response from the Welsh Government is highly progressive, with on average more financial support given to those on lower incomes.

In total up to around 75% of households are expected to be supported in some way. However, nearly twice as much will go to households in the bottom half of the income distribution compared to those in the top half, and three times as much to those in the bottom fifth compared to those in the top fifth.

The £150 cost of living payment is a broad based scheme, whereas the Winter Fuel Support Scheme and Discretionary Assistance Funds are more focused on households with lower incomes. The schemes mean that altogether the support in Wales is more generous and better targeted at the lower end of the income distribution than that offered in England by the UK Government.

Rebecca Evans, Minister for Finance and Local Government, said:

“We know this crisis will be most significant for those who have the least, so targeting support in this way is the fairest way of helping people.

“The cost of living crisis is far-reaching and will affect those who may not have struggled to pay their bills before, so it was right to provide widespread support through the £150 cost of living payment. The extra support through the Winter Fuel Support Scheme and Discretionary Assistance Funds means this is a more progressive package that gets money to those who really need it.”

Jane Hutt, Minister for Social Justice, said:

“Families and households are under strain and we want to make sure people are supported. We’re aware that not everyone who is eligible for support is coming forward, a fact our analysis reflects. Our ‘claim what’s yours’ campaign seeks to raise awareness of the different avenues of support and we encourage everyone who needs it to make the most of what is available.”

The Welsh Government’s cost of living package – which provides support to households in the current financial year and next year – was announced on 15 February. The funding for next year will be voted on today when the Senedd will debate the Final Budget.

Later this month the Chancellor of the Exchequer is expected to make the Spring Statement. It will likely be made shortly ahead of the increase to the energy price cap and the rise in National Insurance, while inflation is expected to keep increasing.

Rebecca Evans added:

“Our £330m support package was designed to ease pressures now while providing reassurance in the longer term. But we know full well that people will still be facing very real challenges. We took action in our budget, now it’s time for the UK Government to step up in the Spring Statement.

“One simple, effective action would be to reverse the cruel decision to remove the £20 uplift to Universal Credit, which has pushed more people towards a financial cliff edge.

“We have suggested a number of other ways it could help households, for example moving the social policy costs to general taxation and introducing a low income energy tariff to better target support to lower income households. Its response to the cost of living crisis has fallen short so far; the Spring Statement must be a catalyst for meaningful, progressive support that will help those who need it the most.”