How will Budget 2024 impact benefits, Universal Credit, and the cost of living?

On Wednesday, Chancellor Jeremy Hunt unveiled his long-awaited spring Budget, fulfilling expectations of a 2 percent reduction in national insurance payments.

Other policy announcements made by Mr Hunt included modifications to child benefits, the implementation of a new tax on vaping products, and a significant revamp of the ‘non-domiciled’ tax status.

The chancellor’s modifications to national insurance contributions have been described as a “tax decrease for individuals who work,” but it has been noted that the tax responsibility for those with lower incomes may still be greater than it was in previous years.

Sir Keir Starmer commented on the chancellor’s statement, expressing that the government is requesting individuals to pay increasingly for decreasing benefits.

The speaker stated that food prices are currently 25% more expensive compared to 2 years ago. Additionally, rents have increased by 10%. For a standard family who is remortgaging this year, this translates to an added cost of £240 per month. The root cause of these economic challenges is due to a lack of government control.

Some of the adjustments made by the chancellor will benefit individuals with low incomes. This will offer limited aid to those who are struggling the most during the current financial struggles.

The following information discusses the impact of the 2024 Budget on individuals who are on Universal Credit, receiving other benefits, or have low incomes.

The HSF, or Household Support Fund, provides financial aid to local councils for the purpose of helping families in need within their communities. Originally set to expire on March 31st, the government has not declared any plans for an extension.

Mr. Hunt, in his budget for the spring, has provided local councils with an additional six months of HSF funding to address this issue. Both local authorities and poverty charities have been advocating for this for several months.

Several local governments had already started rejecting new requests for assistance prior to the March cutoff, but this extension will provide struggling families with an additional financial support for an extra six months.

Shaun Davies, Chair of the Local Government Association, expressed satisfaction with the Chancellor’s decision to expand the Household Support Fund (HSF), which has provided assistance to numerous households experiencing financial struggles.

I am disappointed that the extension was only granted at the last minute and it will only last for a short time. According to three-quarters of councils, there is an expectation that the level of hardship in their area will continue to rise in the next year.

Every local government distributes their HSF funds in unique ways, according to what they believe will have the greatest impact in their region. To discover the resources that are accessible to you, the organization End Furniture Poverty has created a useful tool for seeking assistance.

The government now provides a ‘budgeting advance loan’ for those on UC who are experiencing a sudden lack of funds. Previously, the repayment period for these loans was 12 months, but it has now been extended to 2 years.

You can receive an interest-free loan by automatically deducting it from your Universal Credit payments. You have the option to borrow an ‘advance’ amount within a maximum limit.

Martin Lewis, the financial expert known for saving money, expressed approval for the change through a tweet. He stated that this was a positive change as it decreases the responsibility on those with the lowest incomes to pay back money.

Individuals in the United Kingdom who are facing financial challenges due to debt can seek assistance from the government through a Debt Relief Order (DRO). To be eligible, you must fulfil certain requirements such as having a debt of less than £30,000 and having a monthly disposable income of less than £75.

Before the budget was announced, the cost of a DRO application was £90. However, starting from 6 April, this fee will no longer exist. It is important to note that you will still need to seek assistance from a certified debt advisor, like Citizens Advice, in order to complete the application process.

In regards to the budget announcement, Citizens Advice Chief Executive Dame Clare Moriarty expressed, “The Chancellor’s actions today provide much-needed aid for those in the most desperate circumstances.”

“These 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.”

This year is anticipated to be equally challenging, if not more so, than the previous 18 months for numerous individuals.

The spring Budget did not include any changes to benefits, so they will still increase on 1 April. This was stated by Mr Hunt during his autumn statement last year, stating that they would increase by 6.7 per cent to match inflation.

The increase is lower than the inflation increases from the previous year, which was at its highest point of 11.1 percent in October 2022.

In reaction to the budget, Paul Kissack, CEO of the Joseph Rowntree Foundation, stated: “This budget primarily benefits high-income individuals and large property owners.”

Reducing national insurance may grab attention, but it fails to address the increasing poverty faced by millions in our nation.

“The growing divide between those who struggle to pay for rent or groceries and those who rely on food banks is a harsh reality for many.”

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