What does the spring Budget mean for benefits and cost of living? From Household Support Fund to Debt Relief
Chancellor Jeremy Hunt presented his highly-anticipated spring Budget on Wednesday, delivering on his widely-expected 2 per cent cut to national insurance.
Amongst Mr Huntâs other policy announcements came changes to child benefits, a new levy on vaping products, and a major overhaul of the ânon-domâ tax status.
The chancellor has called his changes to national insurance contributions a âtax cut for working people,â however it has been pointed out that the tax burden for low-earners may actually still be higher than it was a few years ago.
Responding to the chancellorâs statement, Sir Keir Starmer said that the government is asking people to âpay more and more for less and lessâ.
âFood prices still 25 per cent higher than they were 2 years ago, rents up 10 per cent, an extra ÂŁ240 a month for a typical family remortgaging this year, because they lost control of the economy,â he said.
A few of the chancellorâs changes will have a positive impact those on low-incomes, providing limited support for those most in need during the ongoing cost of living crisis.
Below we look at what the 2024 Budget means for people on Universal Credit, receiving other benefits, or low-incomes:
Household Support Fund extended
The Household Support Fund (HSF) is money given to all local councils to support vulnerable households in their area. It was due to end on 31 March, with no indication of an extension from the government.
That has been addressed by Mr Hunt in his spring Budget, giving local councils another six months of HSF funding. Local authorities and poverty charities have been calling for this for months.
Many councils had already begun declining new applications for help before the end of March deadline, but this will give struggling households an extra financial lifeline for half a year longer.
Cllr Shaun Davies, Chair of the Local Government Association, said: âWe are pleased the Chancellor has extended the Household Support Fund (HSF), which has helped millions of households facing hardship.
âIt is disappointing that we had to wait until the very last minute for an extension, and that it is only for a short period. Three-quarters of councils expect hardship to increase further in their area over the next 12 months.â
Each local council allocates its HSF funding differently, based on how it feels it will best serve the area. To find out what support is available to you, the End Furniture Poverty charity offers a helpful assistance finder tool.
Extension to budgeting advance loans pay back
The government currently offers a âbudgeting advance loanâ for people on UC facing an emergency lack of money. Prior to the budget, the repayment period for these loans was 12 months. It has now been doubled to 2 years.
These loans are interest-free, and automatically deducted from Universal Credit payments. You can borrow an âadvanceâ of up to:
ÂŁ348 if youâre single
ÂŁ464 if youâre part of a couple
ÂŁ812 if you have children
Money Saving Expert Martin Lewis welcomed the move, tweeting: âThis is a welcome move. It lessens the burden on some the payback of lowest incomes.â
Debt Relief Order fees scrapped
Those struggling with debt in the UK are able to apply for a Debt Relief Order (DRO) from the government. You will need to meet specific criteria, including owing less than ÂŁ30,000 and having less than ÂŁ75 a month spare income.
Prior to the budget, the application fee for a DRO was ÂŁ90. This will be abolished from 6 April. You will still need to contact an approved debt advisor, such as Citizens Advice, to apply.
Responding the the budget Dame Clare Moriarty, Chief Executive of Citizens Advice, said: âToday the Chancellor supported people in the most dire situations.â
âThese unaffordable fees have priced people out of getting the support they need as 9 in 10 people with a DRO struggled to pay the upfront cost.â
âBut weâre expecting this year to be just as tough, if not worse, than the last 18 months for many.â
Are benefits going to rise?
The chancellor did not address benefits in his spring Budget, so they remain set to rise from 1 April. This was announced by Mr Hunt in his autumn statement last year, confirming they would rise in line with at 6.7 per cent in line with inflation.
However, the rise does not meet the inflation hikes of the prior year, which reached a peak of 11.1 per cent in October 2022.
Responding to the budget, Paul Kissack, Chief Executive of the Joseph Rowntree Foundation said: âThis was a Budget for big earners and big owners.
âCutting national insurance gives you an eye-catching headline but doesnât fill the gap for the millions in our country experiencing deepening poverty.
âFor the people struggling to afford the rent or the weekly shop, or having to visit a food bank, that widening gulf is all too realâ.