Budget 2024 Results In A Net Welfare Cut Of £3.9 Billion In 2029/2030

An analysis of the Chancellor’s Budget 2024, shows that benefit cuts vastly outweigh the benefit ‘giveaways.’

A new Resolution Foundation briefing finds that the changes announced amount to a net welfare cut of £3.9 billion in 2029/2030.

The Foundation does detail some benefit ‘giveaways’:

£1 billion in 2025-26 for the Household Support Fund and Discretionary Housing Payments. The 12-month extension of the Household Support Fund is an improvement on recent extension packages lasting six months, as it gives councils more time to plan the delivery of their schemes, but a permanent funding settlement would be preferable.
Introducing a new ‘Fair Repayment Rate’ by reducing the amount of debt deductions that can be taken from Universal Credit payments. The maximum deduction will be reduced from 25% to 15 per cent of a family’s standard allowance.

This is set to affect 1.2 million families whose Universal Credit income will be £420 per year higher on average as a result.

But this is not a straightforward giveaway, as families will pay back the same debts over a longer period. As such, this change is not expected to cost the Government any additional money.

Increasing the earnings limit for Carer’s Allowance. The Government announced that an additional 60,000 carers will become eligible for Carer’s Allowance between 2025 and 2030, as the weekly earnings limit used to determine eligibility for this benefit has been increased from the equivalent of 13 hours per week at the National Living Wage, up to 16 hours (an increase of around £45 per week). This change will cost £166 million in 2029-30.

Ahead of the Get Britain Working White Paper, which is due later in the autumn, the Government announced £240 million of investment for employment support ‘trailblazers’ in local areas, to trial new ways of getting people back into work.

However, the Foundation highlights that combined, changing the Work Capability Assessment and means-testing Winter Fuel Payments (as well as accelerating the migration of claimants from Employment and Support Allowance onto Universal Credit) will reduce the welfare bill by £4.1 billion by 2029/30, whereas the benefit increases amount to an overall rise of just £0.2 billion.

Overall, these changes amount to a net welfare cut of £3.9 billion in 2029-30.

In addition, says the Foundation, the Chancellor chose not to repeal some of the most poverty-producing benefit rules, leaving the pressure on lower-income families to build.

It then highlights three benefit rules that have had a particularly dire effect on the living standards of the poorest UK households:

the benefit cap
the two-child limit and
the on-and-off-again freezing of the Local Housing Allowance (LHA).

The Resolution Foundation stress that: “These policies break the link between families’ circumstances and benefit entitlements, and therefore have a particularly high impact on poverty rates.

But despite extensive evidence showing that these three policies have extremely negative effects on the living standards of already low-income families, the Chancellor has left the benefit cap and the two-child limit in place at least for the remainder of this fiscal year, while the LHA remains assumed frozen from April 2025.”

For more information see:

More, more, more - Putting the 2024 Autumn Budget in context available from resolutionfoundation.org.
Spring Budget 2024 available from gov.uk.