Cost of Living

(asked on 20th April 2022) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what recent estimate the Government has made of the basic cost of living for a family comprised of two adults and one child.


Answered by
Simon Clarke Portrait
Simon Clarke
This question was answered on 25th April 2022

Russia’s invasion of Ukraine has increased the price and volatility of energy and some other commodities, and has added to disruption in global supply chains. This has started to affect the prices that UK consumers pay for goods including for fuel and domestic energy. Based on market prices taken after Russia invaded Ukraine, the Office for Budget Responsibility forecast inflation to peak at 8.7% in Q4 2022 before falling back towards the 2% target in late 2023.

The government understands the pressures people are facing with the cost of living. These are global challenges, however the government is providing support worth over £22 billion in 2022-23 to help families with these pressures.

This includes providing millions of households with up to £350 to help with rising energy bills and helping people keep more of what they earn. The government has cut the Universal Credit taper rate, frozen alcohol duty and has further increased the National Living Wage to £9.50 an hour from April 2022. The Spring Statement went further, with the government announcing an increase to the annual National Insurance Primary Threshold and Lower Profits Limit to £12,570, a cut to fuel duty, and an additional £500m to help with the cost of essentials through the Household Support Fund.

This builds on action the government has already taken that will help families with the cost of living. Since 2017 the government has offered eligible working parents of 3- to 4-year olds 30 hours of free childcare per week. We have also introduced Tax-Free Childcare, where for every £8 parents pay into their childcare account, the Government adds £2 up to a maximum of £2,000 in top up per year for each child up to age 11 and up to £4,000 per disabled child until they’re 17. Alongside this, £500m to transform ‘Start for Life’ and family help services for parents and babies, and carers and children in half of the council areas across England and over £200 million a year to continue the Holiday Activities and Food programme and deliver the government’s Flexible Childcare Fund commitment.

At each fiscal event HM Treasury has regularly published distributional analysis of the impact of tax, welfare and spending decisions on households. Distributional analysis published at Spring Statement 2022 shows that in 2024-25, the tax, welfare and spending decisions made since Spending Round 2019 will have benefitted the poorest households most (as a percentage of income). The government will continue to keep the situation under review.

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