More than a million households across the UK could benefit from proposed changes to Universal Credit, which are expected to be announced in the Autumn Budget this week.
Labour has been considering reducing the cap on deductions from benefit payments by up to £420 per year, a change that could positively impact 1.2 million households, including 700,000 families with children. The initiative, spearheaded by Work and Pensions Secretary Liz Kendall, aims to introduce a new ‘Fair Repayment Rate’. Under the proposed plan, set to come into effect in April 2025, deductions from Universal Credit would be capped at 15 per cent of claimants’ allowances, down from the current 25 per cent.
Currently, the government deducts a portion of a claimant’s Universal Credit payment to assist with outstanding debt repayments. These deductions can apply to various types of debt, including benefit advances, historical child tax credit overpayments, as well as rent and council tax arrears. Deductions are taken monthly from claimants’ Universal Credit allowances until the debt is fully repaid, but many claimants have reported severe financial hardship as a result.
Although the lower cap would mean debt repayments could take longer, it may provide significant relief for some of the UK’s poorest households, who are already grappling with rising living costs.
When and how to watch the Autumn Budget
The 2024 Autumn Budget will be delivered on Wednesday, 30 October at approximately 12:30pm, with the statement expected to last around an hour. Chancellor Rachel Reeves will lead the announcement, typically starting with a review of the nation’s finances before outlining the government’s proposals.
For those interested, the Budget will be broadcast live on the BBC and streamed on the BBC News website, as well as on Parliament TV.
The previous Budget was held on 6 March 2024, during the last Parliament under the previous government. This upcoming statement marks the first Budget presentation under the current administration.
