Pathwaylogocolorfull

Cost of living crisis: Impacts on households and case studies

Around three-quarters of the total support will go to vulnerable households. Distributional analysis of the impact of these measures on households in England, published in May 2022, shows that the announced measures are highly progressive.

The following illustrative case-study households show the combined impact of recent policy decisions and changes in the labour market:

  • A low-income household (combined gross annual earnings of £26k, including a full-time earner on £10/hour and a part time earner on the National Living Wage) with 2 children who are in receipt of means tested benefits should expect to receive additional government support of £3,200 this year. This includes £850 from today’s measures, £350 from the February package, £2,000 from the UC taper reduction.
  • A low-income couple, both out of work, one of whom has a disability (combined net income of £13,900) will receive a total of £1,350 this year in additional support. This includes £1,000 from today’s measures, and £350 from the February support package.
  • A low-income pensioner household will receive a total of £1,500 this year in additional support. This includes £1,150 from today’s announcement and £350 from the February support package.
  • A single mother of two children who works full time on the National Living Wage will receive a total of £2,500 this year in additional support. This includes £850 from today’s measures, £350 from the February package, £1,200 from the UC taper reduction.
  • A low-to-middle income working family on Universal Credit, with 2 children (combined gross annual earnings of £43k, including a fulltime earner on median hourly wage of £14.10/hour, or around £27,000 per year, and another full time earner on the National Living Wage) will receive £4,200 this year in additional support. This includes £850 from today’s measures, £350 from the February package, £240 from the NICs threshold increase, £2,900 from the UC taper reduction.

In addition, households in work will also benefit from wage increases. In March 2022, the OBR forecast average wage growth to be 5.1% this financial year. This would imply someone on median earnings (£27,000 per year) seeing a net wage increase of more than £900. Those on Universal Credit and state pension will also benefit from uprating of 3.1% in April 2022.