This week’s Budget, the first from the new government, lays out measures aimed at addressing long-standing challenges in the UK economy. The Chancellor’s stated commitments are to stabilise public finances, invest in essential services, and support the most vulnerable.
We welcome some of the positive steps, particularly those targeting lower-income households and struggling communities. However, significant gaps remain for those most financially at risk, and further action is needed to meet the needs of both advice services and the communities we support. Overall, despite some increases in funding streams, this budget does not meet our ambition for long term, sustainable support for the independent advice sector.
Debt and Financial Stability
The decision to reduce Universal Credit (UC) debt deductions from 25% to 15% of the standard allowance is encouraging. This will provide 1.2 million households with an average of £420 annually and reflects long-standing recommendations from advice organisations regarding the impact of unaffordable deductions. Alongside the expanded Household Support Fund, these measures offer some relief to households facing financial insecurity. However, deeper reforms to UC are essential to ensure fair treatment for claimants and to prevent debt cycles that harm the most vulnerable.
Support with the Cost of Living
The increase in the National Living Wage to £12.21 per hour, along with the phased increase in the minimum wage for 18-20-year-olds to £10 per hour, is a positive step for low income households and young people. However, this is not a complete solution to the cost of living, and we know that many of the individuals and communities supported by advice services will still be struggling with rising bills and expenses. It isn’t yet clear how this will affect organisations who are delivering contracts or grants with fixed budgets and may now need to absorb increased salary costs.
Housing and public services
Increased funding for local government, particularly for social care, homelessness, and affordable housing, is very welcome. The £3.1 billion addition to the Affordable Homes Programme and adjustments allowing councils to reinvest Right to Buy receipts are encouraging. Local authorities, with a statutory duty to fund social care and homelessness advice, must ensure that these funds translate into tangible support for those at risk of homelessness, especially as demand for housing advice grows. An additional £22bn has been pledged for the NHS, but the long term strategy for how health services should be delivered at national and local level will be determined by the upcoming 10 Year Plan.
Benefits and Employment Support
There have been significant concerns raised about planned reforms to health and disability benefits. The government have confirmed they will continue with the previous administration’s planned £4bn cuts to the welfare budget, but they will consult further over the coming months on how best to do this. These will have an impact on services delivering welfare benefits advice and for people in receipt of disability related benefits, and the continued uncertainty may make it difficult to plan. However, commitments to support more people into employment are welcome, and if delivered in the right way could make the most of employment advice services and benefit low income households.
Implications for civil society
The Budget has committed to increase employer National Insurance contributions. While we recognise the need for increased revenue, we are concerned about potential impacts on small charities delivering advice. We know this will be a significant concern for many charities, and we support calls for the government to reimburse charities for these increased costs. We encourage our members to join in advocating for this support. Measures such as the increased Employment Allowance will be essential to mitigating these impacts for smaller organisations, which provide vital community support and employment opportunities.
Conclusion
While the Budget makes some positive steps, particularly in supporting lower-income households, we call on the government to pursue additional measures to support the independent advice sector. Our Advice Saves Lives report showed that that effective advice services not only support individuals but yield significant savings in public spending by reducing demand on healthcare, housing, and the justice system. Over the coming months, we will continue to champion advice services with the government and campaign for the changes needed to ensure a strong advice sector, and benefit the communities they serve, across the UK.
