Our thoughts on the autumn budget 2024

We’ve seen a number of positive steps from the chancellor Rachel Reeves in the autumn budget, but it hasn’t fully met the needs of low-income families. 

Our director of external relations Sebrina McCullough offered her thoughts on Labour’s first budget for 14 years and the first-ever from a female chancellor in Britain.  

Cut to benefit repayment deductions from 25% to 15% 

Starting in April 2025, the repayment rate for universal credit will drop from 25% to 15%. This means that over 1.2 million households could be an extra £420 better off.  

While this is a step forward, 64% of the people we support with benefit deductions also need access to a food bank.  

We’ve been lobbying for changes to benefit deductions for some time and think the reduction is a positive step for some of the most vulnerable in society but believe it doesn’t go far enough.  

“In the longer term, we would like to see the government move towards making decisions based on individual affordability to ensure no one is left without enough money for essentials,” said McCullough.  

Carer’s allowance 

Carers have been given a much-needed boost in budget.   

They will now be able to earn over £10,000 a year while still receiving carer’s allowance – the equivalent of being paid 16 hours at the national living wage per week.   

This change is helpful, but we believe the government could improve support further.  

As McCullough pointed out:  

“11% of the people we provide debt support to claim carer’s allowance, with 75% deemed vulnerable. 44% of these people are also affected by benefit overpayment debts, so we would have liked the government to go further and replace the ‘cliff-edge’ limit with a tapered approach to earnings limits.” 

Breakfast clubs 

The chancellor announced a tripling of investment in breakfast clubs for children, which is great news. But we were disappointed there was no mention of extending free school meals to all primary school kids.  

“Breakfast clubs can be a lifeline to families struggling to afford the basics but with schools open for just over half the year (taking into account weekends and school holidays) more needs to be done to support families with the cost of living.  

“Food price inflation rose by around 25% between January 2022 and January 2024, hitting family budgets hard. The income threshold limits to receive free school meals have not been changed since 2018 and remain incredibly low; increasing these limits (or removing them entirely) would be a significant step this government could have taken to support struggling families during term time,” said McCullough.   

Benefit fraud 

A new bill announced in the budget aims to tackle benefit fraud by allowing banks to share data with the government to identify overpayments, potentially saving £4.3bn a year.  

But many people struggle with overpayments rather than fraud.  

“Around 30% of benefit claimants seeking debt support each day do so as a direct result of being unable to repay a benefit overpayment. Often the problem doesn’t lie with the claimant, but with how the claim is processed. We’ve even seen several instances where on investigation people were found not to have not been overpaid but were still pursued for money.” 

McCullough also noted how it’s estimated that around £20bn of benefit entitlement goes unclaimed annually.  

“Any legislation must consider how to prevent fraud and use the data available to engage people who should be claiming proactively but do not know they are entitled to additional benefits. The system must be simplified and streamlined, which should mean that issues naturally fall and fewer claimants will be vilified in the process.”   

Women 

Women have been hit hard by rising living costs. While the budget didn’t directly address the gender pay gap, the increase in the national minimum wage will help those on lower incomes.  

McCullough highlighted: “66% of the women we provide free debt support to are carers, with a large proportion deemed vulnerable. 65% of the caregivers we support also need access to a food bank.   

“In the longer term, we would like to see the government scrap the earning limit for carer’s allowance and introduce a tapered earnings rate to ensure people are not asked to repay huge sums."  

We’ll keep you updated on news that could affect you and your finances.