Ahead of the Budget we teamed up with Martin Lewis and the team at Money Saving Expert and wrote to MPs highlighting the problems with the High-Income Benefit Charge (HICBC) for single parents. We were therefore delighted that the Chancellor announced changes that will see the HICBC threshold increase to £60,000 and plans for rates to be administered on household, rather than individual income. 

From April 2024, the Government will increase the high-income child benefit charge (HICBC) threshold to £60,000. The rate at which HICBC is charged will also be halved so that child benefit is not fully withdrawn until individuals earn £80,000 or higher. Furthermore, the Government will consult on plans to administer the HICBC on a household rather than an individual basis by April 2026. 

The increase to the child benefit threshold will help single parent families who are on higher incomes but are increasingly struggling to make ends meet on one income due to the rising cost of living.  Many single parent families who have had their payments reduced or withdrawn will now find that they are entitled to more support. The Government estimates that 170,000 families earning under £60,000 will no longer be subject to the HICBC, and nearly half a million families will save an average of around £1300 next year. 

We look forward to the Government’s planned consultation on the HICBC and its administration by household income. With the changes to the threshold, dual income households will be able to earn a combined income of just under £120,000 (up to £59,999 each) and still receive full child benefit, while a single income household with £60,000 of earnings will gave to start to repay the benefit and those earning £80,000 will lose eligibility entirely. We don’t believe that’s fair and so we’ll work to make sure the Government’s commitment to change this becomes a reality.   

The Chancellor announced that the £90 charge for debt relief orders (DRO) will be abolished from April. Meanwhile, the repayment period on budgeting advance loans taken out by universal credit claimants will increase from 12 to 24 months. 

The Government announced the abolition of the £90 charge for debt relief orders (DRO) from 6 April 2024. The Chancellor claimed the step would improve access to this personal insolvency debt solution. The Government is also raising the maximum debt value threshold from £30,000 to £50,000. Alongside this, the Government is increasing the repayment period on budgeting advance loans taken out by claimants on universal credit from 12 months to 24 months. This will apply to new budgeting advances taken out from December 2024 and will reduce the monthly repayments on these loans. 

Single parents who need to access a budgeting advance to pay for emergency costs will benefit from a more manageable repayment period, which the Chancellor states will help to make such loans more affordable. As single parents have a savings pot 20 times smaller than the UK average, and an estimated 90% of this group will be on Universal Credit once full migration has completed by the end of 2024, this may prevent some from falling below the breadline. 

In addition, the abolition of the £90 charge for debt relief orders will help those experiencing hardship to manage personal debts they cannot pay. With Gingerbread research finding that 76% of single parent families are in debt (with half of those reporting debts of over £2,000), this change could be a lifeline for many single parents.  

The Chancellor further announced a six-month extension to the Household Support Fund (HSF), which was due to end in March. This will provide a vital lifeline to those most in need during the ongoing cost of living crisis. 

The HSF was introduced in 2021 to support vulnerable households. It is funding given by the Department for Work and Pensions (DWP) to local councils in England, who then pass it on to households facing hardship. Since its inception, over £2.5bn has been given out through the fund and it has supported millions of those in need. The HSF was due to end on 31 March 2024, but has received a welcome six-month extension.  

The extension of the HSF means that single parent families facing hardship can continue to access critical support from their local authorities. With the poverty rate for children in single parent families standing at 44% and the cost of living continuing to rise, the importance of this cannot be overstated. Those who are eligible for the HSF can receive help towards the costs of energy, food and essential household items. However, the eligibility criteria for the Fund may differ between councils. To find out what support is available to you, End Furniture Poverty has created a useful tool. 

Although we welcome the extension to the HSF, we are disappointed that it is only for a short period. The Fund currently makes up 62% of all local welfare assistance, and once it concludes, many local authorities will be unable to plug that gap in crisis support that will be left behind. This is particularly, concerning as three-quarters of councils expect hardship to increase further in their area over the next 12 months. It is clear that a more permanent solution is needed, and this should include addressing the underlying issues with the adequacy of social security. 

The Chancellor announced that the main rate of employee National Insurance will be reduced by from 10% to 8% from April, whilst the rate for self-employed individuals will be cut from 8% to 6%. 

From 6 April 2024, the class 1 national insurance rate will be reduced by 2% (or 2p in every pound), from 10% to 8%. The class 4 national insurance rate for the self-employed will also be cut from 8% to 6%. This follows a previous cut to national insurance rates that was announced in the Autumn Statement. 

The class 1 rate of national insurance is paid by employees with annual earnings between £12,570 and £50,270. Single parents who fall into this bracket may find themselves pocketing more of their salary following the reduction. Similarly, (class 4) self-employed single parents who make between £12,570 and £50,270 may retain more of their profits. The Chancellor stated that for the average employee this means an additional £450 a year, or £350 for someone self-employed. 

While this change will result in many people taking home more money, those on the lowest incomes with benefit the least. Indeed, the Resolution Foundation says that anyone earning £19,000 or less will still be worse off than if the personal allowance had been increased in line with inflation. Meanwhile those earning £50,000 will benefit the most. This is worrying as single parents are more likely to be on lower incomes due to relying on part-time roles to balance their caring responsibilities, and these tend to be in low pay brackets. Additionally, analysis from Women’s Budget Group shows that single men will gain on average close to £500 more per year than single mothers from the combined national insurance cuts in the Autumn Statement and Spring Budget. And couples without children will on average gain over £1,200 more a year. 

The Chancellor pledged to guarantee funding rates to early years childcare providers for the next two years to deliver its free childcare expansion.  

Last year, the government announced an expansion of the 30-hour free childcare offer to all children of working parents from 9 months. To support early-year childcare provides deliver this, the Chancellor has now made a commitment to guarantee funding rates over the next two years. 

We welcome this guarantee and have been campaigning as part of the Early Years and Childcare Coalition for the Government to index funding rates to inflation and wage growth. The announcement offers childcare providers more certainty. This has the potential to mitigate some of the childcare challenges that parents face by beginning to close the shortfall in funding for the sector – a shortfall that results in providers having to increase fees for parents. However, we are disappointed that the Chancellor did not accompany this guarantee with an announcement to increase funding for current rates which are woefully low.