StepChange Debt Charity reacts to Budget

^{30 October 2024}

Responding to measures announced as part of the Budget today by the Chancellor, Richard Lane, Chief Client Officer at StepChange Debt Charity, said:

"It's hugely welcome that the government is taking action to reduce unaffordable deductions from Universal Credit (UC). StepChange has campaigned alongside sector partners on this issue in recent years and last year gave evidence to the Work and Pensions Committee highlighting the problem. 

"Our recent polling shows that those on UC (35%) are almost four times more likely to be behind on at least one essential bill compared to the wider population (9%). In this context, unnecessary debt deductions inevitably cause hardship, leaving vulnerable households to go without essentials or turn to credit to cope. Over nine in ten StepChange clients affected report deductions have caused them to go without essentials. 

"It's also welcome that the Household Support Fund will be extended, which is a vital lifeline to those experiencing financial distress. In the long term we'd like to see the government implement an effective and permanent local crisis support scheme.

"While these measures are encouraging steps to increase incomes for those most at risk of poverty, we hoped the Chancellor would go further by scrapping the two child benefits limit and benefit cap, which particularly hit low income families. Almost half of our debt advice clients are parents, and single parents in particular are overrepresented, for whom financial pressures have only intensified over the past few years. 

"We're concerned to see a lack of intervention on energy debt and affordability as thousands of households continue to struggle to repay energy arrears, and stay on top of rising bills as we approach winter. Energy bills, along with council tax, put a heavy burden on low income households, with reform in both areas desperately needed to address affordability issues. 

"However, the announcement of a rise in minimum wage is welcome and will be beneficial in helping people to build financial resilience and ensuring that work pays. Younger adults who face low and insecure incomes can be particularly vulnerable to problem debt, and a higher increase for younger age groups—a step towards the Government’s commitment to introduce a single adult rate—will help to close that gap."