Thank you for contacting me about debt and the cost of living.
I understand your concerns regarding the rising cost of living. There is a fine line to be balanced between ensuring that taxpayers’ money is being spent correctly and allowing claimants to retain as much of their award as possible for day-to-day needs.
The standard deductions cap has been reduced three times – from 40 per cent to 30 per cent to 25 per cent. This has helped hundreds of thousands of UC claimants to retain more of their award. Reducing the standard cap below 25 per cent would reduce the range of debts a claimants could address, and risk vital obligations (such as Child Maintenance payments) not being made at all.
Claimants can contact DWP Debt management if they are experiencing financial hardship, to discuss a reduction in their rate of repayment or a temporary suspension, depending on their financial circumstances.
I welcome the £37 billion of support that the Government has introduced to help benefits recipients with the cost of living. Recipients of means-tested benefits such as Universal Credit and Pension Credit will be eligible to receive a £650 cost of living payment. Pensioners in receipt of the Winter Fuel Payment will receive an extra £300 this year to help them cover the rising cost of energy this winter. Those in receipt of disability benefits will receive £150 cost of living payments. I believe these will be paid from September. Additionally, households will get £400 of support with their energy bills through an expansion of the Energy Bills Support Scheme, as well as £1.5 billion of support being made available through the Household Support Fund. In addition to the council tax rebate announced in the Spring Statement, the support is worth up to £1,500.
In addition to these measures, I am calling on the Government to go further in two important areas. Firstly, the easiest change the Government could make would be to eliminate VAT on energy bills entirely, a move that would immediately cut energy bills by 5% for every family in the country. This is a measure made possible by our exit from the EU, and one that I and other colleagues have called on the Prime Minister to take in a joint letter.
Secondly, I am campaigning for the green levies that make up a significant portion of current energy bills to be moved to general taxation. This is the easiest and most direct way that the Government can get energy bills down now. It also needs to take the same approach to cutting fuel bills further through additional cuts to fuel taxes given that petrol and diesel prices have continued to rise since the fuel duty cut.
I will continue to engage with ministerial colleagues to ensure that benefits recipients receive the support they need to cope with the cost of living.
Thank you again for taking the time to contact me.
