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

On Wednesday, Chancellor Jeremy Hunt announced his greatly awaited spring Budget, following through with his widely predicted act of reducing national insurance by 2 per cent.

Mr Hunt also made other policy announcements, including modifications to child benefits, the implementation of a levy on vaping products, and a significant restructuring of the tax status for individuals with non-domicile status.

The chancellor claims that his alterations to national insurance contributions are a “tax reduction for employed individuals,” although it has been noted that low-income earners may still be facing a heavier tax load than in previous years.

In reaction to the statement made by the chancellor, Sir Keir Starmer stated that the government is expecting individuals to consistently “pay an increasing amount for a diminishing return.”

According to him, the cost of food has risen by 25% in comparison to two years ago. Additionally, rent has also increased by 10%. This means that the average family will have to pay an additional £240 per month if they choose to remortgage this year. He attributes this issue to the government’s lack of control over the economy.

Some of the chancellor’s revisions will benefit individuals with low incomes, offering limited assistance to those who are most vulnerable during the ongoing financial struggles.

Here we examine the implications of the 2024 Budget on individuals who are on Universal Credit, receiving other forms of assistance, or have low incomes.

The HSF is a monetary allocation provided to local governments to assist households in need within their jurisdiction. As of now, there is no confirmation from the government regarding an extension, and its original end date was set for 31 March.

Mr Hunt has addressed this matter in his spring Budget, granting an additional six months of HSF funding to local councils. Both local authorities and poverty charities have been advocating for this for several months.

Several councils had already started rejecting new requests for assistance prior to the March deadline. However, this extension will provide struggling families with an additional six months of financial support.

Shaun Davies, the chairperson of the Local Government Association, expressed satisfaction in the fact that the Chancellor has extended the Household Support Fund (HSF) to assist numerous households experiencing financial difficulties.

I am disappointed that an extension was granted at the last minute and for a limited time period. According to three-quarters of councils, there is an expected increase in hardship within their region in the next year.

Local governments distribute their HSF funds in varying ways, depending on what they believe will benefit the community the most. The charity End Furniture Poverty provides a useful tool for determining the support options available to you.

The government is currently providing a ‘budgeting advance loan’ to those on UC who are experiencing a sudden shortage of funds. Previously, the loan had to be repaid within 12 months, but it has now been extended to a 2-year repayment period.

These loans are interest-free, and automatically deducted from Universal Credit payments. You can borrow an ‘advance’ of up to:

Martin Lewis, a well-known financial expert from Money Saving Expert, expressed approval for the decision via a tweet: “This is a positive development that alleviates some of the financial strain on those with the lowest incomes.”

UK individuals facing financial debt can request a Debt Relief Order (DRO) from the government. Eligibility requirements include owing a maximum of £30,000 and having less than £75 of disposable income per month.

Before the budget, the cost to apply for a DRO was £90. This fee will no longer be required starting on April 6th. However, you will still need to reach out to a verified debt counselor, such as Citizens Advice, to initiate the application process.

In regards to the budget, Dame Clare Moriarty, Chief Executive of Citizens Advice, expressed that the Chancellor’s actions will assist those in the most desperate circumstances.

The high fees associated with this service have prevented many individuals from receiving the assistance they require, as 90% of those with a DRO were unable to afford the initial payment.

“We anticipate that this year will be equally challenging, if not more so, than the previous 18 months for many people.”

The spring Budget did not mention benefits, which means they are still scheduled to increase on April 1. This was declared by Mr Hunt in his fall statement last year, affirming that they would rise by 6.7 percent to match inflation.

Nevertheless, the increase falls short of the inflation escalations from the previous year, which soared to 11.1 percent in October 2022.

In regards to the budget, Paul Kissack, CEO of the Joseph Rowntree Foundation expressed that it mainly benefited high-income earners and individuals with significant assets.

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Reducing national insurance may grab attention, but it does not address the significant issue of rising poverty among millions of people in our nation.

For those who are facing difficulties in paying for their rent or weekly necessities, or having to resort to using a food bank, the divide between the wealthy and the poor is becoming increasingly apparent.

Source: independent.co.uk