The Spring Budget represents one of the key points of the fiscal year, directly impacting the lives and livelihoods of people all around the United Kingdom. It sets out the priorities of the Government moving forward. In the wake of Chancellor Jeremy Hunt’s announcement, focusing on the more ‘social welfare-oriented’ measures, Gareth Newman, a Social Welfare Trainer at Society Matters cic, sets out what this means in practice for us all in these uncertain economic times.
First, the Chancellor has announced the extension of the Household Support Fund. This will be a welcome announcement to people up and down the UK who are struggling to cope with the increasing cost of living, whether that be rents, mortgages, food, fuel, or indeed any other expense. Over 160 councils have called on the government to extend the HSF, which represents a vital lifeline to alleviate hardship and put people back onto a more sustainable financial footing. Originally due to end March 31st, this has now been extended for 6 months. Unfortunately, unless further support is announced in the meantime, it seems we may face the same cliff edge that so many councils and other organisations have faced previously.
The Chancellor also announced the abolition of the Debt Relief Order charge. Debt Relief Orders are a debt solution available to people who have limited assets, typically having no less than £75 per month left after paying their debts to pay household expenses (among other eligibility criteria). When applying for DROs, a flat fee of £90 is charged. Whilst financial support may be available from charitable organisations, for those who are already in difficult financial circumstances then finding £90 for that charge can be a tall order. Indeed, a report published by Citizens Advice in March 2023 indicated that 60% of people referred for a DRO had an average monthly deficit of £95, meaning their income doesn’t actually meet their essential household bills. We commend the Chancellor for taking a positive step forward to help people manage and move on from their debts, though it’s worth noting that no additional financial support was forthcoming for those applying for bankruptcy, who face much higher fees of £680.
—
Further support was announced for people in relation to Universal Credit who take out ‘budgeting advance’. Budgeting advances are available to people on UC who face one-off unexpected expenses for example, replacing broken appliances, repairs, funeral expenses or other ‘essential’ items like clothes. Ranging from £100 up to £812 (depending on a person’s circumstances, these are typically repaid over a 12-month period. As of March 2023, nearly 1 million UC claimants, of around 6 million in total, were having deductions taken to repay a budgeting advance. Similarly, a report by the Joseph Rowntree Foundation found that nearly 90% of UC claimants are going without at least one essential. Whilst lengthening the repayment period does mean more manageable deductions over a longer period, perhaps a conversation needs to be had about whether this simply represents lengthening the person’s poverty.
One of the more well-trailed measures announced was a further 2% cut to the rate of National Insurance contributions. This is in addition to the 2% cut recently brought in, meaning NI rates will have fallen from 12 percent last year to 8 percent moving, representing a total £900 saving for someone on an ‘average’ salary (taking into account both cuts to NI rates). Whilst a move to help people keep more of the money they earn should be welcomed, in the context of rising prices – food, energy, housing costs, council tax (suspected to largely go up by the maximum 4.99% rate across the country), it remains to be seen what impact this really has on people who may already be struggling.
Finally, the Chancellor also announced some key reforms in relation to child benefit. Expected to commence from April 2026, the High Income Child Benefit Charge will be assessed on a household rather than individual basis. The High Income Charge is currently payable when an individual claims Child Benefit but earns over £50,000, meaning that they can claim it but need to pay it back as part of the Self-Assessment process. The move to assess household income rather than individual income suggests that the Chancellor has listened to feedback on this front; in the past, the system has been criticized for ‘penalising single parents.’ For example, a couple can earn £49,000 each and receive child benefit in full whilst a single parent earning £60,000 will be faced with the loss of that income. In light of this, the threshold will immediately rise from £50,000 to £60,000 individually (having not been uprated since its introduction in 2013). The government estimate this will be worth a saving of over £1000 to eligible families.
—
As the cost of living crisis continues to rage, all eyes were on the Chancellor today to see what support would be available to ease the financial burdens facing people up and deal with the challenges that our parent charity Citizens Advice Gateshead deal with on a daily basis. Whilst some measures are certainly welcome, it’s difficult to escape the view that this represents a ‘tinkering at the edges’ when more direct intervention is needed.
For a full breakdown of what was included in the budget, you can visit the gov.uk webpage on the link below: Spring Budget 2024
