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calendar11 March 2020

Author: Marianne Clough

A budget for the poorest?

A budget for the poorest?

After years of cuts and austerity and talk of bringing down the national debt, this felt like something of a revolution! Here we had a new Chancellor Rishi Sunak, the first post-Brexit budget and a Government in its first term AND Coronavirus… it all seemed to result in a spending spree.

So, which bits of the budget do we at CAP think will benefit the poorest in the UK?

We’re really interested in the £500m hardship fund for local authorities to help economically vulnerable households. This was announced in a raft of measures to help people with Coronavirus. The Government is giving this for councils to use to provide Council Tax relief but, if large numbers of people contract the virus and may not get officially tested, it remains to be seen quite how this will be distributed. We know Council Tax is among the most frightening of debts for the people we help. So, this sounds very promising.

Following on from the announcement that the benefit freeze will end (which is something that has affected a lot of people for years) there was news on Universal Credit: Advances will, from October 2021, be able to be repaid over 24 months instead of 12. This will make a big difference to the people we help. However, we would continue to argue that the option of five weeks without any money to live on - or get into debt - is not a fair choice at all for the most vulnerable people in our society.

Deductions used to be made, up to a total of 40% of the standard allowance, then it went down to 30% and now it will be further reduced to 25% - which we feel is heading in the right direction. Universal Credit still takes time to arrive but at least now it will be slightly less diminished for those with outstanding debts or fines.

Low income workers will benefit thanks to the Chancellor raising the National Insurance bar from £8,362 to £9,500. The Institute for Fiscal Studies says this will release 500,000 people from this tax. People earning less than this each year, of course, will feel no affect.

The much campaigned-for Breathing Space for people in problem debt gets a welcome mention with an investment of an additional £12.5million for HMRC to get working on implementing it this year into next. This shows us that the Government is keen to see this up-and-running - and this is welcomed.

So, overall, a very different budget, with more detail to settle and be analysed in the coming days.


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