Last week, the Chancellor of the Exchequer, Rachel Reeves announced the new government’s first Budget. 

Gingerbread welcomes some of the measures outlined in the Budget, including increases to the national minimum wage and the continuation of the Household Support Fund (financial support that councils provide to those in most need), which should help single parents on the lowest incomes. 

There was also a welcome change in the rules on how the government can take debt repayments directly from someone’s Universal Credit. This will allow for repayments to be made more slowly, resulting in £420 a year more in the pockets of those struggling the most.  

The government also uprated Universal Credit in line with September’s inflation rate.  

Missed opportunity on child poverty? 

The government has said it’s committed to tackling child poverty and is due to publish a child poverty strategy in the spring. So we’re disappointed that the Budget didn’t do more to tackle this issue head on.  

Single-parent households are almost twice as likely to be living in poverty as couple households. That’s why we’re working with government to make sure the needs of single-parent families are at the heart of their new strategy. Along with many others we had been calling on the government to scrap the two-child limit on benefits policy, which today would instantly pull 300,000 children out of poverty. Half of all households impacted by the two-child limit are single-parent households. Failing to make the needed policy change at this Budget is a missed opportunity for the government to start to meet its ambitions on child poverty. 

Unintended consequences 

Some of the decisions in the Budget indicate that the needs of single parents are being overlooked by policy makers. As a result, there may be unintended negative consequences for some groups of single parents. As we set out in our manifesto for change, we believe all policy decisions need to be checked against the impact they may have on single-parent households. 

Of particular note was the announcement that assessment for the High Income Child Benefit Charge will not shift to household income from individual income. Currently, the structure of Child Benefit entitlement allows a dual-income household earning a combined annual income of just under £120,000 (up to £59,999 each) to receive full Child Benefit. However, a single-income household earning £60,000 is not eligible for the full payment.  

We worked with Martin Lewis and his Money Saving Expert team on this. As a result, the last government said they would look for the assessment to be based on household rather than individual income, but the new government has said they won’t go ahead with this change.

We urge the government to think again about addressing this in-built disadvantage for single-parent households. 

There was also a change to inheritance tax that will disadvantage those who become single parents following the death of a partner if they were unmarried. From 2027 onwards inheritance tax will apply to pensions and will worsen existing discrimination between married and unmarried couples. At the moment transfers at death between married and civil partners are free of inheritance tax, but this protection does not apply to unmarried couples. Those hardest hit will be working-age couples where up to 40 per cent of the “death-in-service” money designed to support a widow or widower, in estates over the £325,000 threshold   will be subject to inheritance tax from 2027 onwards. 

 Gingerbread Head of Policy and Campaigns Sarah Lambert says: 

‘We welcome any action by the government to put more money into the pockets of single parents – especially those on the lowest incomes. However, this Budget didn’t go far enough to help those single-parent households who are struggling the most. And it seems that the government has failed to consider the impact of some policy announcements on single-parent households of all income levels.’ 

Speaking up for single parents 

Gingerbread will continue to press for single parents to be at the heart of the forthcoming child poverty strategy. In particular, we’re asking the government to introduce a new check on all polices, to look at their impact on single parents.  

Will you join us?