But there was positive news too. Reeves has announced greater protections for universal credit claimants impacted by deductions due to debt. And there was a boost for unpaid carers which means tens of thousands more people can earn more while still being eligible for carer’s allowance.
We have explored all of this in more depth below, outlining everything you need to know about how the autumn budget might impact benefit claimants.
Benefits will go up by 1.7% in April 2025
The chancellor confirmed that benefits will increase by just 1.7% in April 2025, which is the equivalent of “just a few pounds” extra every month for most claimants.
This is because 1.7% was the September rate of inflation, which was an unusually low inflation rate and the lowest level in more than three and a half years.
By comparison, state pension will increase by 4.1% according to the rules of the triple lock.
Charities have repeatedly urged the government to increase benefits so that people can afford the basics they need to live – universal credit currently falls short by around £120 every month.
Another crackdown on ‘benefit fraud’ with ‘direct access to bank accounts’ to recover debt
Reeves reiterated that the government will crackdown on fraud in the welfare system to prevent “illegal activity”, including a mention of having “direct access to bank accounts to recover debt”.
This will likely prompt significant fear among campaigners, who have consistently warned against Department for Work and Pensions (DWP) plans to “spy” on bank accounts.
Keir Starmer previously announced a Fraud, Error and Debt Bill, which echoes proposals made by the previous government to allow the DWP to monitor people’s financial activity.
Read about the crackdown on fraud and access to bank accounts here.
Rachel Reeves hinted that Labour will continue with the previous government’s plan to reform the work capability assessment, which assesses how much universal credit a person can get if they have a health condition, so that fewer people are eligible for support.
It is not clear exactly what Labour’s reforms will look like, but Reeves said the government had inherited the Conservatives’ plans, and that they will deliver the billions worth of savings that this would create.
It was estimated that this will cut the number of people who are due to be put in the “highest tier of incapacity benefits” by more than 420,000 people, amounting to almost £5,000 lost per year per person.
These plans will mostly impact new claimants but campaigners have said it will apply to existing claimants when their circumstances change, such as if they move house.
Richard Kramer, chief executive at Sense, said: “The government’s decision today is deeply disturbing for disabled people. They have chosen to continue the previous government’s harmful plans to reduce access to benefits. This risks undermining the wellbeing of disabled people, and the consequences could be devastating.
“Disabled households are living in crisis, their current welfare benefits barely cover the essentials and spiralling food and energy costs have pushed many into debt and despair. But instead of choosing to give disabled people proper financial support and beginning to transform lives, the government has played into the dangerous narrative that disabled people should be forced to work.”
Read about the changes to disability benefits here.
People with long-term health conditions to be driven into work
The chancellor has unveiled a £240m ‘Get Britain Working’ package to include work, skills and health support for disabled people and those facing long-term sickness.
Work and pensions secretary Liz Kendall is expected to reveal her ‘Get Britain Working’ white paper, which will entail details as to reform for welfare and employment support, imminently.
Carer’s allowance earnings threshold has increased
The carer’s allowance earnings limit will increased to £10,000 per year, the chancellor has announced. That is the equivalent of £196 every week after tax, up from £151 each week.
It means tens of thousands more people will be eligible for Carers Allowance, which provides financial support to unpaid carers.
However, charities said that the social care system needs a significant funding boost for unpaid carers to see a real change in their circumstances, as the Big Issue reported ahead of the budget.
The Health Foundation estimates there is at least an £8.4bn annual funding gap for adult social care, which means people are missing out on care and the UK is more reliant on unpaid carers.
Universal credit debt deductions will be capped
In positive news, Reeves has announced changes to universal credit which will cap the level of deductions due to debt.
The DWP takes money back from around half of universal credit claimants to repay debts and correct errors, according to analysis from the New Economics Foundation.
The Big Issue has reported on the impact of universal credit deductions, which are said to be causing “poverty, evictions and mental and physical health problems”.
It means that the monthly level of deductions to the standard allowance of universal credit will be capped at 15%, rather than the current 25%.
This will save more than one million households on universal credit an estimated £420 a year.
Campaigners would like the government to go further, such as introducing a minimum income floor below which universal credit could not fall, so that people can afford the essentials they need to live.
Helen Barnard, director of policy at Trussell, said the “decision to ease the burden of debt repayments for people receiving universal credit is a much-needed step towards better protection from hunger and hardship in our social security system”.
Two-child limit on benefits remains in place
There were calls for the two-child limit on benefits to be scrapped in the autumn budget, but Rachel Reeves has continued to resist this.
Labour ministers have been clear that they will not scrap the two-child limit on benefits in the short term, and it was not mentioned in the government’s recent child poverty strategy briefing.
It is estimated that hundreds of thousands of children could be lifted out of poverty if the government dropped the cap, and that it would reduce the cost of child poverty but more than £3bn.
The government may still scrap the two-child limit in the future, but it did not happen in the autumn budget. Its first child poverty strategy will be published in spring 2025.
Joseph Howes, chief executive of Buttle UK and chair of the End Child Poverty Coalition said: “Today’s budget announcement will only go so far towards lifting children, and their families, out of poverty in the UK.
“The government could have chosen to scrap the two-child limit to benefit payments – a policy which drives families into poverty. This opportunity for the government to take quick and decisive action has been missed. More children will be drawn into poverty as a result, on a daily basis.”
Lynn Perry, chief executive of Barnardo’s, added: “Every day that the two-child limit on benefits is in place, is another day that almost half a million children live in avoidable poverty. While we welcome ministers’ commitment to tackling child poverty in the longer-term, it is disappointing that the government has not taken this opportunity to bring this injustice to an end.”
No U-turn on the winter fuel payment cuts
One of the most controversial decisions the Labour government has made so far is means-testing the winter fuel payment, meaning that millions of pensioners will not get the payment of up to £300 to help with their heating bills this winter.
There were calls for the chancellor to reverse her decision over the winter fuel payments, but Reeves has repeatedly defended the cuts and the autumn budget was no different.
The chancellor committed to keeping the triple lock for state pension, meaning it will rise by 4.1% in 2025/2026, meaning pensioners will get up for £470 extra next year. Pension credit standard minimum guarantee will also rise.
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