Autumn Statement gives boost to benefits with uplift in Universal Credit, plus help for renters and parents

Chancellor Jeremy Hunt proudly declared that his Autumn Statement contained 110 measures. Among the tax cuts and a state pension boost, low-income households will be pleased to know there were also some announcements that should help their money go further.

However, welfare payments could be at risk for some people under new plans to encourage the long-term unemployed to take jobs.

We outline the benefit changes and the rise in the minimum wage, plus what help is available for renters and parents.

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Rise in Universal Credit

Each April, the government makes inflation-linked changes to tax credits and benefits, usually in line with September’s CPI inflation figure. 

Despite rumours that the government could use October’s CPI figure instead, which was lower (4.6% versus 6.7%), Hunt confirmed in his speech that September’s 6.7% figure will be used to uprate benefits.

This means disability benefits (which are inflation-linked by law) and Universal Credit will receive the full 6.7% boost in April 2024, adding around £470 on average in 2024-25 for 5.5 million households, according to the Treasury. 

Minimum wage boost

From April 2024, the National Living Wage will rise by 9.8%, from £10.42 an hour to £11.44.

Those aged 21 and 22 will also become eligible for the National Living Wage, as the minimum age threshold is being reduced from 23 to 21, so those workers will see an even bigger increase in their pay packets.

The minimum wage for those aged below 21 will also rise in April. 

Shona Lowe, financial planning expert at the investment company Abrdn, said: “A rise in the statutory National Living Wage to £11.44 from next April comes as welcome news for many, putting more money in their pockets to reduce the strains faced as costs remain high.”

About 2.7 million workers will benefit from the increase in the Living Wage, according to the Department for Business and Trade. 

Help for private renters

The Local Housing Allowance (LHA) is designed to help private renters through housing benefits and Universal Credit - but the rate has been frozen since 2020.

Since then, rents have hit a record high, and tenants have been struggling to keep up with payments, with the average advertised rent excluding London reaching £1,278 per month in the third quarter of 2023, according to Rightmove. 

Hunt announced the government will unfreeze the LHA and “increase the local housing allowance rate to the 30th percentile of local market rents. This will give 1.6 million households an average of £800 of support next year”.

Richard Lane, director of external affairs at StepChange Debt Charity, said: “The unfreezing of LHA will be a welcome boost to many renters unable to keep pace with a frenzied rental market. Our recent polling revealed that more than one in three private renters are relying on credit to afford rent.” 

Free childcare policy to go ahead

Back in the Spring Budget, the government announced that working parents in England would be able to get 30 hours of free childcare from when their child is nine months old, to when they start school.

While Hunt did not announce anything new in his Autumn Statement, he did confirm in his speech that these plans are still going ahead, helping “tens of thousands of parents return to work without having to worry about damaging their career prospects”.

The policy involves extending the current 30 hours free childcare scheme to working parents with children aged between nine months and two years old. It will be rolled out in phases from April 2024.

Welfare payments at risk for some people

The government announced a £2.5 billion five-year Back to Work Plan for those with long-term health conditions, disabilities and difficulties finding employment. It includes tough sanctions for those who can work but choose not to.

From late next year, anyone who fails to find work for more than 18 months will have to do work experience placements.

Some claimants who refuse work, or refuse to engage with job centre staff. will have to reapply for benefits, so will lose access to them for a period of time.

There will also be an overhaul of rules for people who receive benefits because they are unable to work due to health conditions.

Jamie Gollings, deputy research director at the think tank Social Market Foundation, said “the threat of mandatory work placements and benefits being removed if claimants don’t engage” would “send a shiver down the spine of those off work with mental health issues and disabilities, causing them anxiety that could set people back in their recoveries and push them even further from the job market”

He added that “working with employers to build forms of employment that can work around people’s conditions”, such as remote working, was crucial.