Clunky systems hindering more frequent cost-of-living support, says committee
Clunky government systems are standing in the way of more frequent cost-of-living support payments, according to the Treasury Committee.
It highlighted constraints within the welfare payments system as an obstacle to payments being more frequent.
It was previously announced that, as part of a wider support package, cost-of-living support payments totalling £900 will be given to people on means-tested benefits in three payments made directly into bank accounts, in spring 2023, autumn 2023 and spring 2024.
In December 2022, the committee said cost-of-living support payments to people on means-tested benefits should be spread over next winter, with a payment each month for six months.
The MPs argued that smaller, more frequent support payments would smooth the “cliff-edges” which arise when someone who earns just one pound too much, or becomes eligible for a benefit a day too late, receives no support.
Households face missing out on the support altogether if they increase their income through additional work, the committee said.
In the response, published on Monday, the Government stated it cannot make more frequent payments due to limitations with its systems. Doing so could compromise the delivery of “core benefits”.
The Government said cost-of-living payments are made using the Department for Work and Pensions’ “ad hoc payment system”.
It said: “This sits outside the normal benefit delivery system and as a result, is limited in its nature – for example it can only make one payment ‘type’ at a time, and it requires specialist teams to make the payments.”
Further “mop-up” payments for some of the qualifying benefits are also expected to be made, if an entitlement that would qualify someone for a payment is later established to have existed.
The Government said it had concluded that three means-tested cost-of-living payments and a single disability cost-of-living payment “balances spreading the support throughout the year and enables sufficient time for delivery of each payment without compromising core benefit delivery”.
Adding further payments could also delay “mop-up” payments to some people, it said.
The Government also said it had considered the payment design of cost-of-living payments to limit “any perverse work disincentives generated”.
It said: “In particular, in line with the approach taken for 2022-23 cost-of-living payments, qualifying dates for each payment in 2023-24 will be announced after they have passed.
“The purpose of this is to deter fraud and to mitigate risks to work incentives.”
The committee also found the Government had collected limited data on the effectiveness of the household support fund and the number of low-income households outside of the benefit system.
Harriett Baldwin, chair of the Treasury Committee, said it is “disappointing to hear that clunky systems will prevent the delivery of six regular support payments next winter”.
She said: “The lack of analysis on the effectiveness of the household support fund is surprising, and I strongly encourage the Treasury to step up its data collection, particularly looking at whether these billions of pounds of extra help have supported those struggling the most.
“The Chancellor rightly aspires to support the most vulnerable while making work pay.
“Outdated systems and a lack of statistics on how these important schemes are working make his job harder. We thank the Government for such a considered response and look forward to further work in this area in the near future.”
A Government spokesperson said: “We are protecting the most vulnerable households with up to £1,350 of direct support in 2023-24, on top of £1,200 delivered to millions of people last year.
“It would be impossible to choose eligibility windows for the cost-of-living payments that work for every single person, which is why the next payments are being made in three instalments to reduce the chance of someone missing out completely.
“In addition, many of our payments including cost-of-living payments, those made through the energy bills support scheme and winter fuel payments have been staggered throughout the year, while the household support fund is available all year round.”