Decoding the Autumn Statement
Our data tells us that more people than ever are living on empty. For the first time this year more than half of those coming to us for help with debt are in a negative budget. No matter what they do, there’s more going out than coming in.
With the Autumn Statement just days away, there’s increasing speculation as to what the Chancellor will announce. At Citizens Advice, we’re all too familiar with the difficulties facing millions of families in the UK — and we know what will help alleviate this hardship for those who need it most. There are 3 things we’ll be looking out for on 22 November:
- Whether benefits are to rise in the coming year
- Help with high energy costs
- Changes to disability benefits
Below is our guide on how to decode any announcements made.
Benefit decisions
First up is the decision on uprating working-age benefits. A warning, this is a messy process with different rules for different benefits and a whole other set of rules for pensions. However, the main thing to remember is due to the amount of time it takes to prepare ageing computer systems to pay the revised amount, the amount benefits go up by in April is determined by the previous September’s Consumer Price Index (CPI). The Government has a track record of not doing this and over the past decade we’ve had a succession of caps and freezes. The Government could propose a total freeze which would be disastrous for the people we support. Another option the Chancellor might put forward is a lower rate of 3.7%, reflecting where inflation might be expected to be next April, when benefits are due to go up.
Now, here’s the the problem. When benefits last went up, in April this year, they were set according to inflation in September 2022. So, if the Government wants to project forward and ensure benefits are right up to date by next April, the forecast figure of 3.7% isn’t the one they should be using. That would just be inflation from April 2023 to April 2024, so there’d be 6 months missing. The measure they would need to use would be September 2022 to April 2024, which would be something like 10.1%. So, in terms of decoding the Autumn Statement, any commitment to using next April’s forecast inflation measure, unless taking in the whole preceding 18 months, would be a real-terms cut in support for low-income households. The same stands if the Government looks to use the October CPI figure: this is just the preceding 12 months and unless uprating covers the 13 months back to September 2022 and the entirety of inflation in that time, would likewise be a real-terms cut.
Another benefit to look out for is Local Housing Allowance (LHA). This determines how much support someone on a low-income, renting in the private sector, can get and is meant to be set at a level that means roughly a third of properties where someone lives are affordable. However, it’s been frozen since last raised in 2020. There are 3 things the Government might say here.
- They might commit to restoring LHA to the 30th percentile, and while this will still leave many issues, it would offer meaningful support to thousands of people struggling in the private rented sector
- They might increase it by inflation, which would mean some winners and some losers, given inflation is a fixed national indicator and rents vary by area
- Finally, they might also commit to maintaining the 2020 increase (when it was put back up to the 30th percentile) ‘in cash terms’. However, translated this means no new money and no increase, so would be another real-terms cut
A final curveball relates to comments made by the Treasury in response to reports that both the Secretary of State for Work and Pensions and the Secretary of State for Levelling-Up, Housing and Communities had written to the Prime Minister calling for LHA to be increased. This implied that support would come in the form of higher Universal Credit payments for those in work with proposals for a more generous taper (currently people lose 55p in every pound earned and for those earning enough to pay tax and National Insurance this is higher still). Crucially though, this would only benefit those households in work and would leave those unable to work struggling to meet their housing costs.
Energy support
While energy prices might have dropped out of the headlines, for an average household they are currently more than 50% higher than the same period in 2021 — and they look set to rise again from January. With the removal of bill support schemes, more than 1 in 3 households will pay more for energy this winter than last.
Evidence from our frontline services shows people we help are already struggling to pay their energy bills. We’ve helped more people with energy debts this year than in any other year on record. By the end of September we’d already seen more people who couldn’t afford to top up their prepayment meter than in all of last year, which was itself more than the previous 10 years combined. It’s clear that for people struggling to make ends meet more support with energy bills is needed this winter.
The trick at the Autumn Statement will be separating out previous announcements from anything genuinely new. Existing policies we might hear referenced include:
- Cost of Living Payments, which have run throughout the year with the final one due next spring, and the Household Support Fund, which provides emergency support
- The Warm Home Discount, a scheme that provides support to 3 million households most at risk of fuel poverty
- Recent changes to net zero policies, although these actually increased costs for millions of people who rent, by scrapping new energy efficiency requirements
Our data shows these interventions aren’t meeting the scale of need this winter. One way that urgent help could be delivered relatively quickly would be additional government funded payments to top up Warm Home Discount support, which has only risen by £10 (to £150) over the past decade. An increase to £600 would have a really meaningful impact, while a smaller top up to £300 would help the scheme keep pace with rising bills.
Looking further ahead, forecasts suggest that energy prices will remain high in the longer term. A more sustainable solution is needed to put an end to these sticking plaster responses to soaring bills. The best way to achieve this would be through targeted bill support, sometimes known as a social tariff. At last year’s Autumn Statement the Government promised to develop options for more targeted energy bill support from April 2024, but this has yet to emerge; silence at this Autumn Statement would signal that the Government won’t honour its promise this side of the election.
Support to find work or a cut in benefits?
The Government has just consulted on a set of changes to the Work Capability Assessment. This is used to determine 2 things. Firstly, whether someone receives extra money as part of their Universal Credit payment due to being disabled or having a long term health condition. Secondly, how much they are expected to engage with Jobcentre Plus in order to find work (with the threat of sanctions if they don’t).
The Government is making the case that post pandemic the workplace has changed and with greater use of homeworking, more disabled people and those with long-term health conditions can be expected to work. And, alongside this expectation to find work, people will lose their extra payment within Universal Credit. To date, the Government hasn’t confirmed how many people risk losing out but we have seen some estimates in terms of cost savings and the Autumn Statement should confirm these. Changes are due to roll out from 2025. The extra benefit support is worth £4,680.72 per year (before any uprating for 2024–25 is applied), so a saving of around £500m would mean 100,000 people losing out on support, a billion, 200,000 people and so on. A complicating factor will be the time taken to roll out the changes and whether any transitional protection will be available.
Disabled people are already over-represented among those coming to us for crisis support and a cut of this scale, over £4,000, is extremely worrying. Come the Autumn Statement we should have a sense of how many people risk facing this shortfall. Our position is that this is a cut in support and shouldn’t happen.
A final word of warning on government rhetoric. Here there are 2 things we’ll be alert to as the Autumn Statement is delivered. The first is any use of concerns over ‘inflationary pressures’ as a reason not to deliver support to those on the lowest incomes. It is important to be clear that these are not households off to pump surplus cash into the economy by buying a wardrobe of clothes, new car or foreign holiday if they receive the support they need. This is about enough money to have the heating on in the evening and 3 meals a day. Likewise, the current proposals for reducing eligibility for additional payments within Universal Credit for disabled people or those with long-term health conditions are typically wrapped up in references to support; in fact, a crude indicator as to the scale of the financial cut is the number of times the word support is used. With any announcement on the WCA changes, it will be vital to unpick what is new, meaningful support from what is a substantial cut in benefit payments.
Those are the 3 key things we’ll be tracking and the rhetoric we’ll be seeking to unpick. As ever with any fiscal moment, there’ll be surprises on the day and equally time taken to confirm the detail of any announcements made. Overall though, we’ll be looking to see how the budget balances for those on the lowest incomes and whether they’ll be winners or losers come the Autumn Statement.
