The cost of living response: why it's time to focus more squarely on need

Last month, chancellor Rishi Sunak stood before the dispatch box and delivered his third and most significant budgetary response to the current cost of living crisis. As he announced the measures, he pledged:

'We need to make sure that for those whom the struggle is too hard… and for whom the risks are too great… they are supported… We will make sure the most vulnerable and the least well off get the support they need at this time of difficulty.'

Sunak went on to unveil a package that included both universal support with energy costs and targeted help for those judged to be most 'vulnerable': disabled people, older people and those in receipt of means-tested benefits. 8 million households in receipt of means-tested benefits will get two lump-sum payments, totalling £650, with an additional £150 payment for those in receipt of certain disability benefits and £300 for all pensioner households. Every household in the UK will also receive £400 towards their autumn energy bill costs.

This is a large intervention, with the overall package estimated at £15 billion. Early analysis has rightly welcomed the chancellor’s willingness to finally target support where it is most needed, and via the benefit system. This is itself a sign perhaps that he is listening – at last – to the multitude of voices pointing to the extent of the hardship faced by so many. There has also been praise for the chancellor's acknowledgement of the many reasons why people might claim social security during their lives. Those of us critical of the benefit cap (which remained in place throughout the pandemic) were especially pleased to see that those currently capped will also receive this help (something which did not happen with the £20 increase to universal credit during the pandemic). 

But there is much to critique too in this budgetary response. There are big flaws in a sticking plaster approach – what the chancellor describes as 'temporary, targeted, and timely' interventions. The temporary nature of the support creates a permanent climate of insecurity and anxiety. It leaves affected families unable to plan, and constantly worrying about the future instead. With families increasingly getting into debt to pay for essential household items (including food and rent), they simply have no capacity to plan or mitigate for the next unmanageable financial pressure. 

Also problematic, as highlighted in some of the responses to the chancellor's statement, is the flat-rate payment. This refuses to acknowledge how a household's need differs (often drastically) depending on its size. A low-income single person household will receive exactly the same support as a five-person household, with the latter facing extraordinary pressures at a time of soaring prices. We saw a reliance on similar flat-rate payments in the response to COVID-19, most clearly in the temporary £20 increase to universal credit. Such payments take no account of the greater needs and expenses of families with children. They are not an efficient way to tackle child poverty.

Flat-rate payments are arguably part of a broader refusal to adequately support larger families, a refusal baked in by policies introduced under Cameron and Osborne, and now continued under Johnson. Most notable here are the two-child limit and the benefit cap, which are the subject of our ongoing major research programme, funded by the Nuffield Foundation. 

Our research shows the harm that these policies are doing affecting children's wellbeing, daily lived experiences and opportunities, as well as parental mental health. The policies sever the link in the social security system between need and entitlement, forcing families to survive on levels of support that are acknowledged to be inadequate. This link is further undermined by these most recent budgetary changes, with larger families again unable to get the help they so urgently need. They will instead have to make the support provided stretch, an arguably impossible task that will inevitably see parental stress and anxiety rise. 

Only last month, we interviewed parents affected by the two-child limit and benefit cap. They told us just how tough life is at the sharp end of the cost of living crisis. Rachel told us: 

'I'm poorer. I really am. So the cost of living has gone up… We've had to cancel our direct debit with our energy company because they wanted nearly 500 quid a month and I'm like where am I meant to get that from? So yeah, things have dramatically spiralled since October.'

The support the chancellor announced last month is welcome. But he needs to be bolder in recognising that the cost of living goes up by most when you have more than one mouth to feed. For too long, there has been an unwillingness to place household needs at the centre of our social security system. With the cost of living continuing to rise, this needs to change, and fast.

Acknowledgement: The project on which the above draws has been funded by the Nuffield Foundation, but the views expressed are those of the authors and not necessarily the Foundation.

A version of this blog first appeared on the LSE British Politics and Policy blog.