Experts urge employers to continue supporting staff with cost of living after government announces support package

The chancellor unveiled £15bn worth of help for households, but employers can still do more to help with financial wellbeing

MoMo Productions/Getty Images

Businesses still need to step up and support their employees through the cost of living crisis, experts have said, despite the announcement of a multi-billion pound support package from the government.

The treasury recently unveiled a £15bn cost of living support package which will see eligible households receive £650 deposited directly into their bank accounts later this year. On top of this, from October, all energy customers can expect a £400 payment to offset the cost of their bills.

According to the announcement, almost all of the eight million households on means-tested benefits will benefit from £1200 of one-off support.

How to support employees through the cost of living crisis

Real wages drop as unemployment continues to fall, official figures show

Employers ‘running out of steam’ on pay rises as talent shortages continue, CIPD finds

However, experts have called on employers to top up this package of support with their own measures.

Jonathan Boys, labour market economist at the CIPD, said that while many employers “rightly feel a moral obligation to alleviate the squeeze on their workforce”, this doesn’t necessarily have to come in the form of pay increases.

Employers unable to increase pay can implement financial wellbeing policies, and improve their benefits offerings, said Boys.

Get more HR and employment law news like this delivered straight to your inbox every day – sign up to People Management’s PM Daily newsletter

“CIPD research finds that employees working in a company with a financial wellbeing policy report being more likely to feel in control of their finances” he said, adding that “so-called ‘fringe’ benefits’” that help with the cost of housing, travel or childcare could be particularly helpful for lower earners.

Ivan Harding, chief executive of Applaud, was particularly critical of businesses pushing employees to return to the office during this difficult financial period.

“At a time when every penny counts, companies aggressively pushing their staff to return to offices risk putting their employees in financial difficulty” he said. “Travel costs, lunch and other work expenses all pile up. And they’re all unnecessary costs.”

Harding urged employers to encourage home working, arguing “multiple lockdowns” have proven employees are able to work just as effectively at home.

On top of the £650 payment, the government’s support package will include a one-off payment of £150 for around six million people who are on disability benefits. Pensioners will be eligible to receive between £100 and £300 in the winter months, and will also receive a one-time payment of £300 per household as a top up to the Winter Fuel Payment.

Ben Harrison, director of the Work Foundation at Lancaster University, said the measures were “significant”, but described the announcement as “piecemeal”, warning that delaying part of the payment until autumn could leave many households in financial insecurity.

“It’s welcome that the chancellor has finally introduced new measures to help people through the cost of living crisis… But the wait to provide this support has already caused significant damage, and delaying part of this payment to the Autumn risks compounding this,” he said. 

Mike Brewer, chief economist at the Resolution Foundation, added the package would “almost entirely offset the rise in energy bills for low-income families”. But, he cautioned, it would not benefit everyone equally. “Large families on low incomes may feel rough justice as their higher energy usage isn’t reflected in flat-rate lump sum payments,” he said.

The announcement comes as experimental figures from the ONS have shown how average prices for some of the lowest priced essential items are increasing faster than the general rate of inflation.

The analysis of prices of basic goods sold by seven supermarkets over the 12 months until April 2022, showed that the price of the cheapest pasta increased by 50 per cent. Similarly, basic crisps, bread, minced beef, and rice all saw prices rise by between 15 and 17 per cent over the same period.