StepChange responds to budget

Responding to today’s budget, Richard Lane, StepChange Director of External Affairs, said:

“It was vital that today’s budget set out bold plans that targeted support at the millions of households facing real financial difficulty following more than a year of this gruelling cost of living squeeze. The extension of the Energy Price Guarantee, the end to extra pre-payment meter fees and the extra childcare support announced will make a real difference to struggling households.

“But for millions of people, the financial squeeze is rapidly becoming a debt crisis. Currently, one in three people who comes to StepChange for help does not have enough money each month to cover their bills and essentials. They are at breaking point due to soaring utility bills, rising food costs, unaffordable rents or mortgages, and stagnant wages. Alongside the welcome extension of help announced today, the government should act to introduce social tariffs for utilities, end punitive deductions from benefits to repay debts, make the Household Support Fund permanent and ensure that rising council tax does not leave more vulnerable households seeing a bailiff on their doorstep.”

Extending the energy price guarantee will be a huge relief for millions of households but energy prices are still markedly higher than they were 12 months ago, and with real wages not keeping up with inflation, many families will still be struggling to afford their energy bills.

More than one in two new StepChange clients are now in energy arrears, many of whom aren’t eligible for further targeted support and are in danger of falling further into unsustainable debt. That’s why it is so vital that the government urgently introduces a social tariff for energy, which would act as a long-term solution to protect financially vulnerable households from debt and fuel poverty. For those already in difficulty, StepChange is calling on government and energy firms to prevent energy arrears building up further for struggling households, including targeted funding to write-off arrears for people who simply cannot afford to repay.

Today’s package of extra childcare support for people on Universal Credit recognises the need to further support families and those on the lowest incomes. However, it’s important that what the government gives with one hand, it doesn’t take away with the other. Many of those now entitled to extra childcare funding will still experience unaffordable deductions from their benefits to repay debts, blunting the impact of extra support and still leaving them at risk of being pulled further into debt. StepChange has long called for the need to end these unaffordable deductions. The government must act if it is to alleviate financial pressure on low-income households during the cost of living crisis and beyond.