Three in ten Britons on the lowest incomes say such a payment would only help with day to day costs for up to eight weeks
The Social Market Foundation think tank has called on Chancellor the Exchequer Rishi Sunak to give British households a one-off payment of up to £500 to help with the cost of living crisis. Under their suggestion, households without a top-rate taxpayer would receive £300, with a £200 top-up for those on Universal Credit. Economists at the organisation claim this would be better than more complicated solutions, such as cutting taxes or expanding benefits and would allow households to use the money how they see fit.
A new YouGov survey reveals that half of Britons (52%) say they would spend the largest amount of such a supplement on everyday expenses including groceries, bills, and other essentials. A further 18% say they would save or invest the largest part of it, and 12% would put it towards paying off debts.
Breaking this survey data down by household income shows that around six in ten Britons (59-60%) with a household income under £35,000 would direct the biggest amount of the money towards daily spending. Only around one in six (12-15%) say they would save the largest portion of the money. A similar proportion of those with household incomes between £35,000 and £49,999 would also use the payment primarily for essential spending (55%).
However, among those with household incomes of £50,000 or more, only around two in five say they would generally use the money for daily outgoings (39%). Another 30% would instead save the bulk of the money, and 18% would use it to pay debts.
How long would £500 help people cope with increased costs?
Given that the proposed payment would be a one-off, but the cost of living crisis seems set to last for the foreseeable future, for how long would £500 be a financial relief for Britons?
As much as the extra money would prove a boon for many households, even if the payment was given out today, the results show that few would have anything left come April when the renewed energy price cap and planned national insurance hike will further hit Britons’ bank accounts.
Of those who said they would use the largest portion of the £500 for essential spending and bills, 84% say it would be gone inside two months, including 63% who would use it all in a month and some 17% of those using the £500 largely for essentials would do so within two weeks.
For Britons on the lowest household incomes (£0 to £14,999), 83% of those who would direct the money mainly towards essential spending say the money would be gone within two months, including half (52%) who say it would be gone within about a month. For 15%, it would be gone in a fortnight.
Britons with higher household incomes fair little better as 79% of those with household incomes of £15,000 to £34,999 say a £500 supplement would be used up within two months of spending on household essentials and bills. This includes 52% who would use it within about a month and 10% who would use it up within two weeks.
Even at the top end of the scale, nine in ten of those (91%) say the £500 would be gone within two months. Included in this are 72% who say it would be gone within around a month, and 19% who would deplete the payment within the fortnight.