Spring Statement 2022: Is it enough to help low income households?
Charities, financial organisations, and debt advisers have all criticised the chancellor for failing to do more to help households on low incomes and the elderly during the current cost of living crisis.
The Household Support Fund was launched in October last year, with councils distributing their share of the £500m fund to households which need help with food, clothing, and utilities. Sunak has now doubled the fund to £1bn but, with local authorities deciding who will get the cash, some vulnerable people could miss out.
Myron Jobson, senior personal finance analyst at Interactive Investor, said: “The nil VAT levy on energy efficient equipment such as solar panels does nothing to help alleviate the crushing cost of living pressures the nation’s most vulnerable individuals. The policy completed ignores the plight of the almost 40% of UK households living in rented accommodation and feeling the full brunt of the hikes to energy bills.
“There was some respite for low-income households in the form of an extra £1bn in funding to the Household Support Fund. However, they might have to contend with large amounts of red tape to get much needed financial support.
“Overall, shouts of ‘is that it’ is likely going to be the overarching sentiment shared by those struggling to stay financial afloat amid the cost-of-living squeeze.”
Jobson pointed out that the Spring Statement also contained little reprieve for young people. The chancellor failed to address recent criticism of Kickstart Youth Employment scheme by the Public Accounts Committee, which labelled the early delivery of the scheme as chaotic and said it supported far fewer young people than predicted.
There wasn’t much to help prospective students either. Students starting university from September 2023 still face the prospect of having to repay tens of thousands of pounds more than graduates of yesteryear for university education.
Under changes announced last month, repayment term for loans will be extended from 30 to 40 years after graduation, and the income threshold at which repayments begin is set to be reduced from £27,000 to £25,000.
Jobson added: “The planned reduction change in the way interest on student loans is calculated from Retail Price Index (RPI) plus 3% to RPI plus 0% goes some way of easing the financial burden but overall, it is a raw deal for prospective students and could dissuade many from going to university education.”
At the other end of the age spectrum, Age UK pointed out that the statement contained little for older people on low or modest incomes.
Caroline Abrahams, charity director at Age UK, said: “Older people tell us that every time they go shopping the prices seem to have gone up again, and that’s really tough to manage if you’re reliant on a meagre pension. Unfortunately, for older people like these, and younger ones on low incomes too, the next few months threaten to be extremely stressful, as they struggle to continue to make ends meet.”
The statement also didn’t include any measures to specifically help people claiming Universal Credit. The lower your income, the bigger the percentage of it you spend on essentials, and the harder it is to cut costs when prices rise.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “The extra money available through the Household Support Fund will be vital for some. However, what you will be entitled to will depend on the criteria set by your council, so you need to get to grips with how it works, and how to apply. If you’re struggling to make sense of what’s on offer, it’s always worth talking to Citizens Advice, who know the system well and can offer all the guidance you need.”
Last week saw a group of 58 charities call for an increase to benefits in line with inflation. But the chancellor failed to announce such a rise. This will be a blow to millions of people on Universal Credit still reeling from the £20 a week cut to their income from October last year.
Paul Farmer, chief executive of Mind, said: “With inflation at sky high levels, an 8% increase to benefit payments in line with the increases in the cost of living was the bare minimum the chancellor needed to announce today. Without this increase we will see people already struggling, many with mental health issues, plunged into further financial distress by what amounts to the second cut to their household income in less than six months.”