How will Labour’s autumn budget affect benefit claimants?

We’ve delved deeper into all of this below and outlined everything you need to know about how the autumn budget could affect benefit claimants.

Social benefits will increase by 1.7% in April 2025

The Chancellor confirmed benefits will rise by just 1.7% in April 2025; this equates to “just a few pounds” extra each month for most applicants.

This is because 1.7% September inflation rateThis was an unusually low inflation rate and the lowest in more than three and a half years.

By comparison, state pensions will increase by 4.1 per cent under triple lock rules.

Charities have repeatedly called on the government to increase social benefits so people can afford the basic needs they need to live; Universal credit currently falls short at around £120 a month.

Another blow to ‘benefit fraud’ with ‘direct access to bank accounts’ to recover debt

Reeves reiterated that the government will do so Crackdown on fraud in the welfare system to prevent “illegal activity,” which included having “direct access to bank accounts to collect debt.”

This will cause serious fear among campaigners who have repeatedly warned against plans by the Department for Work and Pensions (DWP) to “spy” on bank accounts.

Keir Starmer had previously made a statement. Fraud, Error and IOUThis reflects recommendations made by the previous government to allow DWP monitoring people’s financial activities.

Reforms to work ability assessment to reduce disability benefits bill

Rachel Reeves confirms Labor will continue previous government’s reform plan work ability assessmentIt assesses how much universal credit a person can receive if they have a health condition, ensuring that fewer people qualify for support.

It is estimated that this would reduce the number of people eligible for “peak incapacity benefits” by more than 420,000 people, meaning a loss of around £5,000 per person per year.

These plans will mostly affect new beneficiaries, but campaigners have said it will also apply to existing beneficiaries if their circumstances change (for example, in the case of a house move).

Sense Chief Executive Richard Kramer said: “Today’s government decision is deeply troubling for disabled people. They chose to continue the previous government’s harmful plans to reduce access to benefits. This risks compromising the well-being of disabled people and the consequences can be devastating.

“Households with disabilities are living in crisis, existing benefits barely cover basic needs, and spiraling food and energy costs have driven many into debt and despair. “But instead of choosing to give disabled people appropriate financial support and begin to transform lives, the government has used the dangerous narrative that disabled people should be forced to work.”

People with long-term health problems will be directed to work

The Chancellor announced the £240 million ‘Make Britain Work’ package, which includes jobs, skills and health support for disabled people and those facing long-term illness.

Work and Pensions Secretary Liz Kendall is expected to unveil her white paper ‘Make Britain Work’ soon, which will detail reforms to welfare and employment support.

Carer’s allowance earnings threshold increased

The Chancellor has announced that the carer’s allowance earnings limit will be increased to £10,000 per year. This is equivalent to around £180 per week after tax at £151 per week.

This means tens of thousands more people will be able to benefit from Carer’s Allowance, which provides financial support to unpaid carers.

But the social care system needs significant funding support before unpaid carers can see a real change in their situation, charities have said. Big Trouble reported ahead of budget.

The Health Foundation estimates there is an annual funding gap for adult social care of at least £8.4bn; This means people are missing out on care and the UK is more reliant on unpaid carers.

Universal credit debt deductions will be limited

In positive news, Reeves announced changes to universal credit that will limit the level of deductions from debt.

The DWP is recovering money from around half of universal credit claimants to repay debts and correct mistakes. analysis from New Economics Foundation.

The Big Issue’s news is as follows: Impact of universal credit cutsThese are said to cause “poverty, evictions, mental and physical health problems.”

This means the level of monthly deductions from universal credit’s standard allowance will be capped at 15% instead of the current 25%.

This will save more than a million households around £420 a year on universal credit.

Campaigners want the government to go further, such as introducing a minimum income floor below which universal credit cannot fall, so people can afford the basic needs they need to live.

Helen Barnard, Trussell’s policy director, said: “The decision to ease the debt repayment burden on universal credit recipients is a much-needed step towards better protection from hunger and hardship in our social security system.”

The two-child limit for social assistance continues

There were calls to remove the two-child limit on benefits from the autumn budget, but Rachel Reeves continued to resist this.

Labor ministers have made it clear that they will not lift the two-child limit on benefits in the short term, and this was not mentioned in the government’s latest statement. child poverty strategy briefing.

It is estimated that hundreds of thousands of children could be lifted out of poverty if the government lifted the cap, which would reduce the cost of child poverty by just over £3bn.

The government may lift the two-child limit in the future, but this did not happen in the autumn budget. The 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 the UK’s children and their families out of poverty.

“The government could have chosen to remove the two-child limit on benefit payments; This is a policy that drives families into poverty. The government’s opportunity to act quickly and decisively was missed. As a result, more children will be pushed into poverty every day.”

No U-turn on winter fuel payment cuts

One of the most controversial decisions the Labor government has ever made Testing winter fuel paymentThis means millions of pensioners will not be able to receive payments of up to £300 to help with their heating bills this winter.

There have been calls for the Chancellor to reverse his decision on winter fuel payments, but Reeves has repeatedly defended the cuts and his autumn budget was no different.

The Chancellor has committed to maintaining the triple lock for state pensions, meaning the pension will rise by 4.1% in 2025/2026, meaning pensioners will receive an extra £470 in pay next year. Pension loan standard minimum guarantee will also increase.

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