Report

Did the Cost of Living Payments help vulnerable households?

This report presents the findings of an evaluation of the Cost of Living Payments, focusing on the 2023-24 payments.
Two people who's heads are not showing, sitting down and looking over receipts or bills.

About the study 

The UK experienced a sharp increase in the cost of living during 2021 and 2022. The Cost of Living Payments (CoLPs) were lump-sum payments intended to support immediate pressures faced by the most vulnerable households impacted by the rise in the cost of living.

There were three separate types of CoLP, each with different eligibility criteria, although many recipients were eligible for, and received, more than one:

  • Means-Tested Benefit Cost of Living Payment (MTBCoLP). This was paid to those receiving means-tested benefits, including Universal Credit.
  • Disability Cost of Living Payment (DCoLP). This was paid to those receiving a disability benefit, such as Personal Independence Payment.
  • Pensioner Cost of Living Payment (PCoLP). This was paid to pensioner households who received a Winter Fuel Payment (WFP), meaning they were born before 25 September 1957.

The primary aim of the evaluation was to understand the extent to which the payments helped recipients manage the increased cost of living, and how this varied between groups. To that end, the evaluation looked at which expenses became most difficult for recipients to afford, the extent to which recipients were aware of the payments, what they spent the payments on, and the impact they felt the payments had. 

Findings 

The Cost of Living Payments aimed to help those who were most vulnerable to the increased cost of living. Over half of recipients were in absolute poverty, and most put the money towards energy bills, which shows that the payments were an effective way of helping those most in need to meet their most pressing expenses. Over 80% of recipients felt the payments helped them afford their energy and utility bills, and over 60% felt the payments helped them afford food and groceries.

However, the impact of the payments was generally short-term, with the money usually spent in the month in which it was received. MTBCoLP and DCoLP recipients spent their payments especially quickly: 29% of MTBCoLP recipients and 35% of DCoLP recipients spent their payments within a week.

Despite providing some relief for vulnerable groups, the payments were imperfectly targeted because they were not sensitive to the fact that some recipients had much higher essential outgoings than others. Those who were struggling most with the cost of living were those with additional expenses, such as paying rent, repaying debts, healthcare-related expenses, or the extra costs that come with raising children. 

The means-tested payments, paid at a flat rate regardless of family size, were not sensitive to the increased pressure faced by parents. Parents were more likely to feel that their everyday expenses had become more difficult to afford, and they were much more likely to have borrowed money. For example, 66% of single parents with three or more children had borrowed money in the last year to help pay for everyday expenses, compared to 38% of single adults without children. Because of these additional pressures, 57% of single parents of three or more children spent their October/November 2023 means-tested payment within a week, compared to just 22% of single adults without children.

Methodology 

The evaluation used a mixed-method design, including surveys and qualitative interviews with recipients, informed by a high-level Theory of Change. A total of five surveys were conducted online and by telephone:

  • Initial surveys covered three groups: means-tested payment recipients (2,608 respondents), disability payment recipients (881), and pensioner payment recipients (1,022).
  • Follow-up surveys were then conducted with means-tested payment recipients (912 respondents) and pensioner payment recipients (536) to track longer-term impacts.

Alongside these surveys, 90 in-depth qualitative interviews were conducted with recipients between February and April 2024. A further 20 follow-up interviews were conducted in July and August 2024 with recipients identified as particularly vulnerable in the first interview.