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Economy

Chancellor Jeremy Hunt announces financial measures amid cost of living crisis

As the UK grapples with an escalating cost of living crisis, Chancellor Jeremy Hunt introduces financial relief measures. However, experts warn of a widening wealth gap, and families face challenges from nursery programme errors to persistent financial strains.

In response to the ongoing cost of living crisis affecting millions across the UK, Chancellor Jeremy Hunt has introduced a series of financial measures aimed at easing household burdens. These include a 2p cut in National Insurance tax and modifications to Child Benefit, among others. Despite these efforts, experts from the Resolution Foundation think tank have voiced concerns that such changes might disproportionately favor higher earners, potentially exacerbating the wealth gap. Concurrently, government data reveals an uptick in absolute poverty over the last two years, further underscoring the nation’s economic challenges.

Nevertheless, a recent dip in inflation to 3.4% offers a semblance of hope amidst these financial adversities. Despite this slight improvement, prices remain significantly elevated compared to pre-pandemic levels, signaling a protracted path to economic recovery.

To aid those struggling financially this April, the government will continue its regular benefits and pensions payments, including Universal Credit, State Pension, and Child Benefit. However, delays are expected for payments scheduled on Good Friday or Easter Monday. Additionally, low-income families have access to various support mechanisms, such as the Household Support Fund, budgeting advance loans, charitable grants, energy provider assistance, and council tax reductions.

In another sector, the UK government’s initiative to expand free nursery hours for two-year-olds has encountered significant hitches. Administrative errors and an insufficient number of places have caused confusion and frustration among families, with some parents being inaccurately informed that their eligible children do not exist in the system. This has led to increased financial strain due to unanticipated childcare costs. Nursery providers also report struggling with the initiative, citing inadequate government funding which compels them to shoulder extra costs, thus affecting their ability to offer quality education and support for children with additional needs.

Regarding financial health, the Financial Conduct Authority (FCA) revealed in January 2024 that over 7 million UK residents were facing difficulties with bills and credit repayments. Although this figure marks an improvement from the previous year, financial challenges persist, particularly among renters, single adults with children, and residents of the north-east of England. The FCA emphasizes the importance of reaching out to lenders for assistance and exploring resources such as the Government-backed MoneyHelper website and debt help charities, especially for those experiencing financial stress, which can adversely impact mental health.

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