What does the spring Budget mean for benefits and cost of living? From Household Support Fund to Debt Relief

The chancellor’s statement included a few important changes for those on lower incomes

Albert Toth
Friday 08 March 2024 06:43 GMT
Hunt jokes Starmer needs to ‘shed a few pounds’ during spring Budget

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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 Hunt’s other policy announcements came changes to child benefits, a new levy on vaping products, and a major overhaul of the ‘non-dom’ tax status.

The chancellor has called his changes to national insurance contributions a “tax cut for working people,” 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.

Jeremy Hunt delivers his 2024 spring Budget to Commons
Jeremy Hunt delivers his 2024 spring Budget to Commons (Sky News)

Responding to the chancellor’s statement, Sir Keir Starmer said that the government is asking people to “pay more and more for less and less”.

“Food prices still 25 per cent higher than they were 2 years ago, rents up 10 per cent, an extra £240 a month for a typical family remortgaging this year, because they lost control of the economy,” he said.

A few of the chancellor’s 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.

Labour Leader Keir Starmer responds to the Budget
Labour Leader Keir Starmer responds to the Budget (Parliament TV)

Cllr Shaun Davies, Chair of the Local Government Association, said: “We are pleased the Chancellor has extended the Household Support Fund (HSF), which has helped millions of households facing hardship.

“It 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.”

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 ‘budgeting advance loan’ 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 ‘advance’ of up to:

  • £348 if you’re single
  • £464 if you’re part of a couple
  • £812 if you have children

Money Saving Expert Martin Lewis welcomed the move, tweeting: “This is a welcome move. It lessens the burden on some the payback of lowest incomes.”

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 £30,000 and having less than £75 a month spare income.

Prior to the budget, the application fee for a DRO was £90. This will be abolished from 6 April. You will still need to contact an approved debt advisor, such as Citizens Advice, to apply.

Jeremy Hunt and PM Rishi Sunak in Commons on 6 March
Jeremy Hunt and PM Rishi Sunak in Commons on 6 March (Parliament TV)

Responding the the budget Dame Clare Moriarty, Chief Executive of Citizens Advice, said: “Today the Chancellor supported people in the most dire situations.”

“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.”

“But we’re expecting this year to be just as tough, if not worse, than the last 18 months for many.”

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: “This was a Budget for big earners and big owners.

“Cutting national insurance gives you an eye-catching headline but doesn’t fill the gap for the millions in our country experiencing deepening poverty.

“For the people struggling to afford the rent or the weekly shop, or having to visit a food bank, that widening gulf is all too real”.

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