By Rory Weal – Senior Policy and Public Affairs Manager
The Chancellor yesterday asserted that his budget would be all about taking the “long-term” decisions. However, what we saw was long-term decisions for some – namely tax cuts benefiting middle and higher earners – but only short-term sticking plasters for those on the lowest incomes, the people most in need of support.
The background to the budget has seen unprecedented numbers of people unable to afford essentials such as food, heating and clothing, and being forced to turn to food banks. That’s why it was so important that the Chancellor took the action needed to prevent living standards falling even further in the coming year. But the action taken yesterday fell well short of that goal.
The Chancellor did take welcome steps to extend the Household Support Fund and reduce the burden of debt deductions facing households on the lowest incomes. But while a step in the right direction, both announcements are only sticking plasters. They are not substitutes for long-term solutions that address the continued issues of poverty, hunger and hardship in this country.
The Household Support Fund extension will allow councils to continue providing some much-needed programmes locally to support people facing sudden financial crisis. Local crisis support can play a vital role when households face a sudden unexpected cost, or income shock, which puts them at risk of falling into financial hardship, including through providing ‘cash-first’ crisis support or in-kind benefits, coupled with integrated access to preventative advice and support.
But extending the Household Support Fund for only six months will leave councils and charities scrambling to fill an even bigger gap down the line. More people are likely to fall into unaffordable debt, be unable to afford essentials, and have no choice but to turn to food banks – who are already at breaking point. Extending the cliff edge every six months gives councils very little opportunity to plan effectively, and ensure this support can be well targeted at those most in need.
Extending the period of repayments for budgeting advances will lessen the short-term burden for some households to the tune of around £20 a month, as repayments are recouped over 24 months instead of 12 months. Any effort to reduce the amount that the Government can claw back from people’s Universal Credit payments through deductions is welcome. But up to 25% of people’s Universal Credit payments can still be deducted to pay debts to the Department of Work and Pensions, with very high numbers of people having to turn to food banks facing these unaffordable repayments.
Both measures only provide temporary relief for households on the lowest incomes. It is disappointing to see that the “long-term” measures the Government has chosen to invest in are measures which will not help many of those on the lowest incomes. Most of the gains from yesterday’s tax cuts will go to people on middle and higher incomes, which the Chancellor described as “permanent”. Those on lower incomes will receive far less help, despite the escalating crisis of hunger, hardship and debt across the UK. Anybody earning less than £19,000 will lose more from tax threshold freezes than they will gain from the rate cuts. Whilst those earning too little to pay National Insurance, or unable to work due to ill health or caring responsibilities, will not benefit at all from the cuts.
The level of hardship facing our communities requires serious solutions for the long-term. An Essentials Guarantee needs to be a priority for any future budget because charities simply cannot continue to bear the burden of a social security system that isn’t fit for purpose. We should all expect future fiscal events to fulfil their most basic duty: to protect the people that need their help most.
