In response to the cost of living crisis, Chancellor Jeremy Hunt introduces financial measures including tax cuts and benefits adjustments, as criticism arises over their effectiveness and fairness, alongside reductions in energy costs announced by Ofgem.
In April 2024, Chancellor Jeremy Hunt announced a series of financial measures amid the cost of living crisis, including a National Insurance tax cut of 2p, alterations to Child Benefit, and an extension to the Household Support Fund. Despite these initiatives, the Resolution Foundation voiced concerns that they might skew in favor of higher earners. During this period, absolute poverty in the UK saw a near million-person increase in 2022/23 compared to the previous year, exacerbated by persistent inflation at 3.4%.
Key benefit payment dates in April for recipients of Universal Credit, State Pension, and Pension Credit, among other supports, have been adjusted for the Easter holidays to ensure timely disbursement. Furthermore, avenues of financial aid include budgeting advance loans, charitable grants, energy provider programs, and council tax reductions, in addition to expanded access to free childcare for working parents. Benefits and state pensions are scheduled to rise in April, with benefits increasing by 6.7% and state pensions by 8.5%, drawing attention to the potential impacts of not raising the benefit cap.
Separately, the Liberal Democrats warned that the UK government’s freeze on tax thresholds could lead to over one million pensioners paying income tax by 2027-28. With the personal allowance threshold held at £12,570, an estimated 1.6 million more pensioners would be taxed compared to an inflation-adjusted scenario. This development has sparked criticism from both the Liberal Democrats and former Tory pensions minister Baroness Altmann, especially given the potential financial strain on the elderly population.
In energy sector news, household energy costs are set to decrease to a two-year low, with Ofgem announcing a 12.3% reduction in its price cap, equating to an annual savings of £238 for typical dual fuel homes in England, Scotland, and Wales. These savings come alongside a £28 annual support payment for struggling customers and plans for a permanent solution for prepayment customers facing higher standing charges. However, campaigners argue for structural sector reforms to ensure sustainable energy cost management for households. This includes calls for the expansion of renewable energy sources and enhancements to insulation programs.
