How could the Spring Statement affect you and your money?
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Now that the Chancellor has delivered her Spring Statement understanding what lies ahead can help you feel more prepared for any changes that have already taken place.
What is the Spring Statement?
The Spring Statement, sometimes called the “mini-budget,” is one of two annual financial updates. The other, the Autumn Budget, will be presented later in the year.
It provides an update on the economy’s overall health and progress since the Autumn Budget and allows people and businesses to share their views on potential changes.
What does the Spring Statement mean for me?
The Spring Statement will impact different households in different ways, particularly affecting those receiving benefits, the National Living Wage, and those with household expenses.
How will the Spring Statement affect my benefits?[1]
Here’s a brief overview:
Personal Independence Payments (PIP)
- Stricter eligibility criteria will be introduced from November 2026, meaning existing claimants may be reassessed under new rules.
- If your condition is found to be less severe under the new criteria, you may lose your PIP payments.
- New criteria may affect 370,000 individuals, with an average loss of £4,500 annually.
- These changes could have a major impact on people who depend on PIP for mobility, care, or essential living costs.
- By 2029-30, about 3.2 million families could see average losses of £1,720 per year.
Universal Credit
- Claimants may see an average increase of £420 annually by 2029-30, benefiting 3.8 million people.
- The standard allowance for single claimants over 25 will rise from £92 to £106 per week by 2029-30.
- The health element will remain at £97 per week for existing claimants until 2029-30, while new claims will see reductions starting in 2024.
- Young people will need to be 22 before they can access the health element.
Unemployment benefits
- New Style Jobseeker’s Allowance (JSA) and Employment and Support Allowance (ESA) will merge into Unemployment Insurance.
- Unemployment Insurance will be available to those who have contributed sufficiently to National Insurance.
- Payments are expected to be set at £138 per week.
- The benefit will be time-limited, though further details on the duration and eligibility criteria are still to be confirmed.
Child Benefit
- From summer 2025, those liable for the High-Income Child Benefit Charge (HICBC) can report payments digitally and pay directly through PAYE, removing the need for Self-Assessment.
- The HICBC applies to individuals or couples where at least one person earns over £50,000 annually.
- The charge increases with income, and those earning £60,000 or more will need to repay the full amount of Child Benefit received.
What will happen to my earnings?
The National Living Wage, the minimum hourly rate for workers aged 21 and over, has increased from £11.44 to £12.21 per hour from April 1st.[2]
Three million workers will see an annual pay increase of around £1,400.[3]
What about my expenses?
The Spring Statement set the stage for significant changes as we prepared for upcoming adjustments to household bills. From April 1st, at least five of your everyday bills have increased.
1. Water bills[4]
Household water bills in England and Wales rose by an average of £10 per month, varying across different water providers.
Several factors influenced your bills, including whether you had a water meter and how much water you use.
In Scotland, water bills have risen by nearly 10%. Northern Ireland residents haven’t been affected, as their water bills are government-funded.
You could use the BBC’s calculator to see how much your water bill has increased.
2. Energy Bills[4]
Starting in April, the typical household’s annual energy bill rose by £111, bringing the total to £1,849.
This change followed the recent decision by the energy regulator, Ofgem, to increase the energy price cap. This cap, reviewed every three months, limits the amount energy suppliers can charge for each unit of gas and electricity consumed.
3. Council Tax[4]
- In England, council tax has risen by up to 4.99%.
- In Scotland, some areas have seen increases of up to 10%.
- In Wales, some households have faced increases as high as 15%.
- Northern Ireland uses a domestic rates system, where property owners are charged based on the value of their home. A domestic rate is a tax applied to residential properties based on their estimated value. It’s similar to council tax in other parts of the UK.
4. Car tax[4]
The standard road tax for cars registered after April 2017 has risen to £195. Before, it was based on a sliding scale dependent on a vehicle’s CO2 emissions, with higher taxes for vehicles that emitted more CO2.
Electric vehicles (EVs) are no longer tax-exempt from April 2025. New EVs will incur a £10 fee in the first year before moving to the standard rate.
5. Broadband, phones and the TV licence[4]
This year, the telecoms regulator has introduced new rules requiring mobile and broadband providers to inform customers about any price increases in clear terms, specifically “in pounds and pence,” including the date these changes will take effect.
These rules primarily apply to new customers, so whether you experience a price rise depends on when you began your contract.
Additionally, the annual cost of a TV licence has risen by £5, raising the total cost to £174.50.
Is inflation getting better or worse?[5]
Prices are expected to rise more than previously predicted, with inflation averaging 3.2% this year. However, forecasts suggest a drop to 2.1% in 2026 and 2% in 2027. While higher interest rates may persist in the short term, real household disposable income is projected to increase by 2% by 2030, which could mean an extra £500 a year for the average household.
Remember, though, these are projections and may shift over time.
What can I do to keep my budget in check?
Here are five simple steps to help manage these changes:
- Review your budget – Track your income and expenses to work out how much – and what – you need to adjust.
- Reduce non-essential spending – Look for ways to cut back on things like takeaways, subscriptions and impulse buys.
- Maximise your income – Use our Benefits Calculator to check if you’re eligible for additional support, including council tax reductions or energy discounts.
- Save on bills – Compare utility providers, switch to better mobile plans and use meal planning to reduce your grocery costs.
Tools like BudgetSmart can help you find ways to lower your expenses and boost your income, helping you stay in control of your finances.
Need help with your finances?
If you’re worried about managing your budget following recent changes, don’t worry, we’re here to help.
You can reach us at 0800 813 1833, chat with us on Live Chat or fill out our form to connect with us on WhatsApp.
For more tips on managing your finances, BudgetSmart offers practical advice to help you stay on track all year round.
[1] https://researchbriefings.files.parliament.uk/documents/CBP-10220/CBP-10220.pdf
[2] https://www.gov.uk/national-minimum-wage-rates
[3] https://www.thescottishsun.co.uk/money/14548010/pay-rise-for-three-million-workers/