Ask Grace - How does the budget affect me
How does the budget affect me?
You may be aware that last month the government announced a new budget which included lots of changes to welfare benefits.
There was a lot of information shared so I’ve broken it down into changes to rules about work and benefits and changes that may benefit you.
Changes to rules about work and benefits
- The minimum wage will increase from £8.91 to £9.50 an hour from 1 April 2024.
- Support for childcare costs will be increased and paid upfront from Universal Credit from Summer 2023, meaning you’ll no longer have to pay first and reclaim the money back
- Payments will increase to £951 per month for one child and £1,630 for two or more children
- Parents working at least 16 hours a week will receive 30 hours of free childcare, which will be introduced in phases
- Children up to two years will receive 15 hours free from April 2024
- Children aged between nine months and two years will receive 15 hours free from September 2024
- Every working parent of a child between nine months and five years will have access to 30 hours of free childcare per week from September 2025.
In addition, extra funding is being allocated to local authorities for before and after school childcare provision in schools.
The threshold which decides whether a part-time worker must look for better paid work is being increased from 15 to 18 hours. This means more part-time workers will be asked to look for additional or better paid work
Previously for couples where one or more person is claiming Universal Credit, one person was exempt from having to look for work if their partner’s earnings were high enough. This threshold has been removed, meaning either unemployed or low earning partners claiming benefits will be asked to look for work regardless of their partner’s earnings. Claimants who previously did not have to look for work will now have to do this. This includes -Parents of one and two-year-old children and some parents working part-time with low earnings
The Work Capability Assessment, which is the assessment to decide how much your disability or illness limits your capability to work, will be abolished. This change is unlikely to be introduced before 2026/2027 and will be introduced in stages
Disabled claimants will qualify for a new top-up called a health element only if they receive Personal Independence Payment (PIP). If a disabled person does not claim PIP, they could lose out. If they receive PIP, then only a single PIP assessment is needed to decide whether they are fit to work.
Other changes that may benefit you
- The 5p cut to petrol and diesel has been extended for another year
- Taxes on fuel will be frozen for the next 12 months.
- The Energy Price Guarantee caps how much the average household will pay for their energy. It’s capped at £2,500 and will stay the same until June 2023
- The Energy Price Guarantee will then increase to £3,000 until June 2024
- Energy prices will then be decided by the energy price cap, which is set every three months by Ofgem, the energy regulator
- The Energy Bill Support Scheme (£400 discount to help with winter energy bills) ended in April 2023
- Those on pre-payment metres will no longer pay higher rates for their energy, so their charges will be the same as direct debit customers from 1 July 2023.
Extra support available from 1 April 2023
None of these cost-of-living payments affect the tax you pay or the benefits or tax credits you receive.
- £900 to households on eligible means-tested benefits (The first installment of £301 will be paid between 25 April and 17 May 2023. The payment of £300 is due in the autumn of 2023 and the payment of £299 is due in the spring of 2024
- £300 for pensioner households
- £150 to people on an eligible disability benefit.
Anyone who thinks they should have received this help but didn’t should contact the office that pays their benefit or tax credits.
If you’re affected by changes to the rules about work, our employment and training team may be able to help you. To find out more and register online, please visit our employment and training page.
For free and confidential advice on benefits, budgeting, and debt, please visit our support with budgeting and debt page.