diff --git a/changelog.d/771-cost-of-living-docs.md b/changelog.d/771-cost-of-living-docs.md new file mode 100644 index 000000000..54842c7f8 --- /dev/null +++ b/changelog.d/771-cost-of-living-docs.md @@ -0,0 +1 @@ +- Add a documentation page covering the Cost-of-Living Payments (2022-23 and 2023-24) and the 2022 Energy Bills Rebate; ticks off two more entries in the #771 docs-pages todo list. diff --git a/docs/book/programs/gov/treasury/cost-of-living-payments.md b/docs/book/programs/gov/treasury/cost-of-living-payments.md new file mode 100644 index 000000000..798c0fefe --- /dev/null +++ b/docs/book/programs/gov/treasury/cost-of-living-payments.md @@ -0,0 +1,65 @@ +# Cost-of-Living Payments and Energy Bills Rebate + +In response to the 2021-23 cost-of-living crisis the UK government +announced two distinct one-off support packages. Both are modelled in +PolicyEngine UK under `gov.treasury.*` and feed into household net +income via [`gov_spending`](https://github.com/PolicyEngine/policyengine-uk/blob/main/policyengine_uk/variables/gov/gov_spending.py) +and the HBAI benefit aggregates. + +## Energy Bills Rebate (winter 2022) + +Announced by the Chancellor in February 2022 to help households with the +spike in domestic energy prices. Two strands: + +- **£150 Council Tax Rebate** for households in Council Tax bands A–D in + England, paid in April 2022. Equivalent payments were made by the + devolved administrations. +- **£200 Energy Bills Credit** delivered via energy suppliers to all + domestic electricity customers from October 2022. Originally announced + as a repayable loan, the repayment requirement was scrapped at the May + 2022 emergency support package. + +PolicyEngine models these via: + +- `energy_bills_rebate` (Household, YEAR) = `ebr_council_tax_rebate` + + `ebr_energy_bills_credit` +- Parameters at `parameters/gov/treasury/energy_bills_rebate/`: + - `energy_bills_credit.yaml` — the £200 flat household amount + - `council_tax_rebate/bands.yaml` — qualifying CT bands (A–D) + - `council_tax_rebate/amount.yaml` — the £150 rebate amount + +## Cost-of-Living Payments (2022-23 and 2023-24) + +Two successive packages, both modelled through the variable +`cost_of_living_support_payment` at `gov/treasury/cost_of_living_support/`. +The variable returns the **sum** of three independent strands depending +on which qualifying benefits the household receives: + +| Strand | 2022-23 | 2023-24 | Qualifying benefits | +|--------|---------|---------|---------------------| +| Means-tested CoL Payment | £650 (two instalments) | £900 (three instalments) | Universal Credit, Pension Credit, Housing Benefit, income-based JSA / ESA, Income Support | +| Pensioner CoL Payment | £300 | £300 | Winter Fuel Payment recipients | +| Disability CoL Payment | £150 | £150 | DLA, PIP, Attendance Allowance, AFCS, IIDB, SDA, child / war disability pension | + +From 2024-01-01 the parameter values are explicitly reset to zero so the +one-off doesn't extrapolate forward. + +### How PolicyEngine computes the payment + +For each strand `s ∈ {means_tested_households, pensioners, disabled}`: + +``` +on_s = (sum of household's reported amounts in s.qualifying_benefits) > 0 +strand_s = s.amount(period) * on_s +``` + +Total `cost_of_living_support_payment = means_test_bonus + pensioner_bonus + disabled_bonus`, +i.e. the strands stack — a pensioner on Pension Credit who also receives PIP +will collect all three payments. This matches the actual policy. + +## References + +- [HMT/DWP, May 2022 cost-of-living support package announcement](https://www.gov.uk/government/news/millions-of-most-vulnerable-households-will-receive-1200-of-help-with-cost-of-living) +- DWP, [Cost-of-Living Payments 2023-24 guidance](https://www.gov.uk/guidance/cost-of-living-payments-2023-to-2024) (means-tested, pensioner and disability strands). +- HMT, [Energy Bills Support Scheme](https://www.gov.uk/government/publications/the-energy-bills-support-scheme-explainer) and [Council Tax Energy Rebate](https://www.gov.uk/government/publications/the-council-tax-rebate-2022-23-billing-authority-guidance). +- House of Commons Library briefing [CBP-9501 — Cost of Living Payments and the energy crisis](https://commonslibrary.parliament.uk/research-briefings/cbp-9501/).