Yesterday, the Chancellor of the Exchequer, Jeremy Hunt, announced his Autumn Statement, spelling out the government’s priorities and spending plans ahead of what is likely to be an election year in 2024. But what does it mean for the almost 13 million people in the UK who are heavily in debt, and face the daily worry of overdue bills and mounting interest payments?
Despite some positive news, the Office for Budget Responsibility predicts the largest reduction in living standards since records began in the 1950s. The Chancellor announced no targeted help to deal with the enormous personal debt mountain that has built up during the cost of living crisis. 6.4 million people are behind on their energy bills, and with reports that costs will increase again this winter, debts are likely to go up, rather than down.
The Good?
There was some good news for housing campaigners, with the announcement that the government was unfreezing Local Housing Allowance. This means that the benefit will increase for the first time in three years and that rates should now cover the bottom 30% of market rents. Soaring rents are a major cause of rent arrears and a further stress on heavily indebted families.
Campaigners have also welcomed the rise in minimum wage and the move to stick to a higher rate for increasing benefits in line with inflation, linking it to September, rather than October’s inflation rate. But, as pointed out by the TUC, the real value of benefits will still be £35 less than when the Conservative party came to power.
The Bad
But many have also criticised changes to the work capability assessment, saying it could have a devastating impact on people living with disabilities on the lowest incomes. We hear time and again from people in debt that the threat of reducing benefits is a major cause of anxiety. Campaigners have pointed out that’s what needed is a benefits system which at least covers the essentials.
Some of what was announced could help prevent more people being forced into the stress of unpayable debts. But with a record 13 million of us heavily in debt, an almost 70% increase in the last six years, much more action is needed.
Overall, the budget arguably focused more on cutting taxes that will largely benefit those who are already better off than supporting communities who have been at the front end of the cost of living crisis for the last two years. This will only scratch the surface of what is needed to support people struggling with record levels of overindebtedness.
The very bad
The Chancellor could have used this moment to bring in changes that people urgently need, like introducing a new scheme to address the energy debt mountain, which we have called for along with other campaigning charities, including Stepchange and the Money Advice Trust.
With record numbers of people heading into energy debt this winter, including those who may be worried about the forced installation of prepayment meters, now the ban has been lifted, more must be done to support people to get out of debt.
The Ugly
Overindebtedness can be a huge source of stress in peoples live, 50 per cent of adults who are struggling with debt also have a mental health issue, and once in debt it can be almost impossible to get out. Worrying about debt can also stop people speaking out.
The Chancellor could have done so much more to deal with the UK’s household debt crisis in this year’s Autumn Statement. And we’ll carry on campaigning to make sure he gets the message ahead of the likely general election next year.
So far, over 17,000 people have signed our petition calling for action on energy debt, make sure your name is added before we hand it in, in a few weeks’ time.