The change, expected to be announced in the budget, will see a cap on deductions to benefit payments made each month to repay short-term loans and debts
Over 1 million of the UK's poorest households are set to benefit from a change to universal credit, which will see them £420 better off annually on average. This change is expected to be announced in next week's budget.
Save the Children UK welcomed the move, describing the current level of benefit deductions borne by the poorest families as unfair and unsustainable. Ruth Talbot, Save the Children UK’s policy and advocacy adviser, said: "It is bold thinking from ministers and we know it will have a significant impact for families and put more money in their pockets for food, toys, clothes and books."
By making this change, claimants could end up repaying these debts over extended periods, though the precise cost to the Treasury remains unclear. Earlier proposals for a more lenient scheme by Trussell were estimated at adding £3bn to the public sector net debt. Trussell's research found that most families affected by universal credit deductions had endured periods without food, heating, or adequate clothing in the past six months due to insufficient income. Despite these steps, there is a sense of disappointment that officials haven't taken bolder action like setting a minimum protected level.
Campaigners are particularly concerned about the rising numbers of children experiencing extreme levels of poverty or destitution. New research by the Joseph Rowntree Foundation estimates that the UK’s poorest families are up to £700 a year worse off than they were five years ago. The government has dismissed calls to scrap the two-child benefit limit, despite significant pressure from campaigners and backbenchers. They argue that abolishing the Tory-designed policy is financially unfeasible. The government has also faced criticism for reductions to the winter fuel allowance.
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