Politics
More than 1m households to get £420 budget boost in universal credit change | Universal credit
More than 1m of the UK’s poorest households will be £420 a year better off on average as a result of a change to universal credit set to be announced in next week’s budget.
The measure is intended to primarily help the worst-off families, and will be seen as a way for ministers to head off criticism over decisions to cut winter fuel allowance for most pensioners and maintain the two-child benefit cap.
“It’s a downpayment on poverty reduction. It is unacceptable that people are in this kind of deep poverty, and this is a small victory for people in deep poverty,” one Whitehall source told the Guardian.
The measure, called the Fair Repayment Rate, is expected to come into force next April and will cap the amount that can be cut from benefit payments each month to repay short-term loans and debts.
It was welcomed by the charity Save the Children UK, which described the current level of benefit deductions shouldered by the poorest families as unfair and unsustainable.
Ruth Talbot, Save the Children UK’s policy and advocacy adviser, said: “It is bold thinking from ministers and we know it will have a significant impact for families and put more money in their pockets for food, toys, clothes and books.”
The move would cap the level of monthly deductions to individuals’ universal credit standard allowance at 15%, rather than the current 25%. It would help 1.2m households, including 700,000 families with children, who now see between about a sixth and a quarter of their monthly universal credit payments clawed back.
Benefit deductions are taken automatically for a range of debts, including Department for Work and Pensions (DWP) benefit advances, historical child tax credit overpayments, rent and council tax arrears, and water and utility bill debts.
The move would in effect allow claimants to repay debts over a longer period. It is unclear how much this will cost the Treasury. A more generous deduction minimisation scheme drawn up by the food bank charity Trussell earlier this month was put at £3bn in public sector net debt.
Save the Children estimates the measure could see single parents receive up to £39 more of their universal credit entitlement each month. For two-parent families, this could be up to £62. In some areas of the UK, two-thirds of children in households in receipt of universal credit are pushed deeper into poverty due to deductions.
Helen Barnard, the director of policy at Trussell, said: “This would be a positive first step to tackling the appalling levels of hardship our community of food banks see every day. On its own, however, this is unlikely to significantly reduce the numbers of people forced to turn to food banks to survive.”
Trussell studies have shown that the vast majority of households hit by universal credit deductions had been forced to go without food, heating or clothing in the previous six months because of lack of income.
There is some disappointment ministers did not go further and introduce a formal minimum protected floor to universal credit. This would have also neutralised the extreme poverty-creating effects of benefit cap deductions, which have left some families living on as little as £4 a day per person.
It is understood the welfare secretary, Liz Kendall, co-chair of the government’s child poverty strategy, has been arguing for the Fair Repayment Rate to be introduced to provide some relief to low-income families hit hard by the cost of living crisis.
Families on the lowest incomes typically pay more for food and energy than better-off households, with their day-to-day bills consuming a far greater share of their budgets, leaving them more at risk of problem debt or going without food and heating.
Latest figures show there were 4.3 million children in relative poverty in 2022-23, equivalent to one in three of all UK children, and an increase of 700,000 since 2011. Campaigners are especially worried about the increasing numbers of children experiencing extreme levels of poverty or destitution.
New research by the Joseph Rowntree Foundation estimates the UK’s poorest families are up to £700 a year worse off than they were five years ago. It said living standards for the poorest third were due to fall over the next five years, widening income inequalities, without government action.
Ministers set out the government’s 10-year child poverty strategy framework this week, ahead of a more detailed plan of action to be published in the spring. “Tackling child poverty is both a moral imperative and crucial to building a stronger society and economy,” it said.
The government has rejected calls to abolish the two-child benefit limit, despite heavy pressure from campaigners and backbenchers, arguing that scrapping the Tory-designed policy is unaffordable. It has also been criticised for cuts to winter fuel allowance.
In a separate budget announcement, the Treasury announced a boost to social housing, with an additional £500m to be given to the government’s affordable homes programme.
Additionally, housing associations will be allowed to set rents for five years, giving them more stability to invest in extra housing. They will be allowed to raise rent by the consumer price index level of inflation plus 1% each year.
The BBC reported that the chancellor will increase the amount employers pay in national insurance to raise £20bn for public services. Reeves is also expected to lower the threshold for when employers start paying the tax.
Politics
Stamp duty tax on second homes to rise
The rate of stamp duty paid by people buying a second home is to rise, Chancellor Rachel Reeves has announced in the Budget.
Stamp duty is a tax paid when buying property over a certain price in England and Northern Ireland.
People buying an additional property are already subject to a higher rate, and from Thursday this will rise from from an extra 3% to 5%.
Reeves said the move would “support over 130,000 additional transactions from people buying their first home, or moving home, over the next five years”.
However, analysts say the increase rate could affect landlords’ willingness to buy more properties.
Paul Johnson, director of the Institute for Fiscal Studies think tank, said renters would “pay part of the cost” of the increase in stamp duty for second-home buyers and landlords “as the supply of such properties falls”.
Ben Beadle, chief executive of the National Residential Landlords Association, said: “The chancellor has failed to heed the warnings of the Institute for Fiscal Studies that higher taxes on the rental market lead only to rents going up.
“What tenants needed was a Budget to boost the supply of new, high-quality rental housing. What we got is a recipe for less choice and higher rents.”
But Ben Twomey, chief executive of campaign group Generation Rent, said: “Renters who have been able to save a deposit to buy a home will get a boost from the increased stamp duty surcharge.
“The higher costs for investors will make it easier for first-time buyers to compete in the house sales market.”
Currently, buyers of homes worth less than £250,000 do not pay stamp duty. This was doubled from £125,000 under Liz Truss’s mini-Budget in September 2022.
The threshold is £425,000 for those buying their first property, with the level raised from £300,000 in the mini-Budget.
However, next March the thresholds are due to revert back to the lower levels set before the mini-Budget.
The current rates of stamp duty are:
- £0-£250,000 (£425,000 for first-time buyers) = 0%
- £250,00-£925,000 = 5%
- £925,001-£1.5m = 10%
- £1.5m+ = 12%
From Thursday, people buying a second home will pay an extra 5% on top of this.
Meanwhile, the Budget included a £500m boost in funding for the Affordable Homes Programme, which the government said would deliver up to 5,000 new social and affordable homes.
Reeves also confirmed the government would reduce Right to Buy discounts in a bid to increase the supply of council housing.
The Right to Buy scheme allows tenants renting council-owned homes to buy them at a discounted rate.
The chancellor said councils would also be able to keep 100% of the money raised from sales of housing so this could be reinvested into new supply.
Politics
Vaping tax and tobacco duty rises set out in Rachel Reeves’ Budget
The cost of vaping and smoking will increase following tax rises announced in Chancellor Rachel Reeves’ Budget.
A new tax on vapes of £2.20 per 10ml of e-cigarette liquid will kick in from October 2026.
That will be accompanied by an equivalent increase of £2.20 per 100 cigarettes in tobacco duty to “maintain the financial incentive to switch from tobacco to vaping”.
Reeves also set out immediate above-inflation increases of 2% on tobacco and 10% for hand-rolled tobacco.
On alcohol duties, she said that, from February 2025, there would be a 1.7% reduction in draught beer duty, to shave “a penny off a pint in the pub”.
However, rates on non-draught products, such as wine and spirits, will rise by the higher RPI measure of inflation.
Defending the rise, the chancellor said “two-thirds of alcoholic drinks sold in pubs are served on draught”.
The UK Spirits Alliance (UKSA) called the hike a “kick in the teeth”, adding: “Today’s decision won’t stop thousands more pubs and distillers closing down.”
However, Katherine Severi of the Institute of Alcohol Studies welcomed the move saying it would “help narrow the widening gap in affordability between pub and supermarket alcohol”.
“There are both public health and economic reasons to move people back to drinking in pubs and not at home.”
In its last Budget before losing the election, the previous Conservative government said it wanted to introduce a vaping tax and set up a consultation on the changes.
The consultation said the tax aimed to make vaping “less accessible to young people and non-smokers while also raising revenue for funding vital public services like the NHS”.
It had proposed different levels of tax based on the amount of nicotine in the vaping liquid. However, Reeves has instead opted for a flat rate.
Head of the UK Vaping Industry Association John Dunne called the vape tax a “nonsensical move” that penalised people who used vapes as a method to give up smoking.
He said: “Some three million adults are former smokers thanks to vaping, which is strongly evidenced as the most effective way to quit conventional cigarettes, saving the NHS millions of pounds in treating patients with smoking related conditions.”
The new Labour government had already said it wanted to stop vapes being branded to appeal to children, and has announced a ban on single-use vapes, due to come into effect in England in June 2025.
Ministers have also pledged to continue plans, set out by former Prime Minister Rishi Sunak, to ban people born in or after 2009 from buying cigarettes.
In a measure aimed to encourage manufacturers to reduce sugar content in drinks, the Budget confirmed an increase to the Soft Drinks Industry Levy.
The existing exemption for milk-based drinks will be reviewed.
Politics
Budget unveils big taxes, big borrowing and big spending plans
I said this morning this Budget would be big. And big is exactly what it is.
We got a sense of that very early on from the chancellor, when she said: “This Budget raises taxes by £40bn.”
To state the obvious, that is a massive amount of money.
The thrust of what we have heard is very much in line with what we reported in advance – with one or two tax rises suggested in some places that are not actually happening.
So, the thresholds at which levels of income tax and National Insurance contributions are paid, which are frozen until 2028, will be unfrozen then.
That’s the opposite of what was expected.
Frozen thresholds contribute towards what is known as “fiscal drag” and amount to big tax rises – where people can be hauled into paying a tax, or a higher rate of it, courtesy of inflation.
But it is worth remembering that Rachel Reeves could have unfrozen the thresholds before 2028 and chose not to, and could later choose to maintain the freeze.
The other tax rise many thought could happen but did not was fuel duty.
But put these two to one side – this is a massive tax raising budget.
Alongside it, where they will spend some of that money – on the NHS and schools in England, for instance.
Big taxes, big borrowing and big spending.
But also projected pretty anaemic growth and inflation above its 2% target.
There is one big question – will all this make enough difference that people think their lives are getting better?
Politics
Starmer slams Tory leader candidates for Southport comments
The prime minister has criticised both Conservative leadership candidates for casting doubt on the police and government’s response to the Southport attack that left three young girls dead.
Tory leadership hopeful Robert Jenrick has suggested information on the attack was “concealed”, while his rival Kemi Badenoch argued that the government, police and prosecutors “have questions to answer”.
This follows the revelation 18-year-old Axel Rudakubana, who is accused of murdering the three girls, was charged with two further offences – including one under the Terrorism Act.
Sir Keir warned MPs they “can either support the police in their difficult work” on the Southport case or “undermine” it.
During his weekly Prime Minister’s Questions session, Sir Keir told a packed House of Commons: “It is important police and prosecutors are able to do their difficult job.
“All of us have a choice to make, including those running to be Conservative leader, they can either support the police in their difficult task or they can undermine the police in their difficult task, and I know what side I am on.”
Badenoch was in the Commons to hear the comments.
Sir Keir was responding to a question from Reform UK’s deputy leader Richard Tice, who called for the police to be more open about investigations.
Reform UK leader Nigel Farage faced criticism after the Southport killings for questioning the police’s assessment of the attacks.
Following the revelations about the extra charges against Mr Rudakubana, Farage released a video claiming “perhaps I was right all along”.
On Wednesday, Mr Rudakubana appeared in court charged with production of the poison ricin and possession of a military study of the Al Qaeda training manual, an offence under terrorism legislation.
Counter Terrorism Police are not currently treating the Southport attack itself as a terrorist incident.
The teenager had already been charged with the murders of Bebe King, six, Elsie Dot Stancombe, seven, and nine-year-old Alice Dasilva Aguiar who died at a Taylor Swift-themed dance class on 29 July.
Following reports of the new charges, Jenrick told ITV News he wanted answers on “when the prime minister knew”.
“The state should not be lying to its own citizens,” he said.
Asked if he thought the state had lied, Jenrick said: “We don’t know the reason why this information has been concealed.
“Why has it taken months for the police to set out basic facts about this case that it is reasonable to believe were known within hours or days of this incident occurring?”
In a social media post Badenoch said there were “serious questions to be asked of the police, the [Crown Prosecution Service] and also of Keir Starmer’s response to the whole situation”.
She said: “Parliament is the right place for this to happen.
“While we must abide by the rules of contempt of court and not prejudice this case, it is important that there is appropriate scrutiny.”
The BBC understands senior figures in government first became aware of the possibility of new charges against the suspect in the Southport murders in the past few weeks.
A spokesperson for the prime minister said it was “not correct” to say the government had been involved in withholding facts from the public.
The CPS said it has taken time to bring the charges because this was a “lengthy and complex investigation”.
Ahead of PMQs, House of Commons Speaker Sir Lindsay Hoyle warned MPs of the risk of seriously prejudicing criminal proceedings by commenting on the investigation in the Commons.
While members might be frustrated at not being able to comment he said: “More importantly at the heart of this case are three young girls.
“We all went to see justice for them and others affected by this appalling incident.”
The day after the Southport attack, thousands attended a peaceful vigil in the town, but a separate protest later turned violent outside a mosque.
This sparked a wave of protests across many towns and cities in the following days, leading to violence and rioting, particularly against asylum centre hotels.
More than 1,000 people have been arrested, and hundreds have been charged and sentenced to jail.
Politics
Starmer thanks Sunak for hard work, commitment and decency
Prime Minister Sir Keir Starmer has thanked his predecessor Rishi Sunak “for his service” to the country, and wished his family well for the future.
The Speaker also mentioned that this is the last time Sunak would appear at PMQs, as a new Conservative Party leader is due to be selected on 2 November.
Politics
Government aware of new Southport charges in past few weeks
The most senior figures in government first became aware of the possibility of new charges against the suspect in the Southport murders in the past few weeks, the BBC has been told.
A spokesperson for the prime minister said it was “not correct” to say the government had been involved in withholding facts from the public.
It comes after the two candidates for the Conservative leadership said the government had questions to answer about the new charges.
Axel Rudakubana, 18 – who is accused of murdering three young girls in Southport – is facing two further charges, including one under the terrorism act.
On Tuesday he was charged with production of a biological toxin contrary to Section 1 of the Biological Weapons Act 1974.
He has also been charged with possessing a PDF document of a kind likely to be useful to a person committing to or preparing an act of terrorism, contrary to Section 58 of the Terrorism Act 2000.
The teenager had already been charged with the murders of Bebe King, six, Elsie Dot Stancombe, seven, and nine-year-old Alice Dasilva Aguiar who died at a Taylor Swift-themed dance class on 29 July.
To charge someone under the Biological Weapons Act, the Crown Prosecution Service has to obtain consent from the government’s law officers – the attorney general or solicitor general.
The BBC has been told that in this case, consent was requested in recent weeks, and granted “within days”.
The teenager had been due in court in Liverpool for a pre-trial preparation hearing last Friday, 25 October.
That was postponed in order for all the charges to be dealt with together at Westminster Magistrates Court, where he will appear on Wednesday 30 October.
The charging decision and its timing were a matter for the CPS, a government spokesperson added.
It comes after the two candidates for the Conservative leadership raised questions about the new charges.
Robert Jenrick suggested that information was being “concealed” from the public.
“We were told for months that this was not a terror-related incident, and yet we have learnt that this individual, the suspect, was allegedly reading al-Qaeda manuals and had access to dangerous substances like ricin,” he said.
“Given the scale of public interest, I think it is an important question to be asked, why was this information not put into the public domain sooner? So I’m asking the public authorities and the prime minister, what did they know, when did they learn it, and why was the decision taken not to be more honest and transparent with the public.”
Meanwhile Kemi Badenoch has suggested there are “serious questions to be asked of the police, the CPS and also of Keir Starmer’s response”.
She has not elaborated on what those questions are, suggesting they should be asked in Parliament.
The police say it is “certainly not the case” that they have been keeping things from the public. It would be highly unusual for them to release details of a live police investigation.
The CPS suggest it has taken time to bring the charges because this was a “lengthy and complex investigation”.
The new charges do not mean the Southport attacks are being treated as a terrorist incident.
Possessing a document that could be useful in preparing an act of terrorism is an entirely separate offence.
To be labelled as terrorism, the attack would have to be an attempt to advance a political, religious, racial or ideological cause. But it is not clear what possible motivation there might have been.
Authorities are urging people not to speculate, as it could jeopardise the entire court case.
Home Secretary Yvette Cooper said: “These additional charges will undoubtedly be distressing for people in Southport.
“The most important thing is to get justice for Bebe, Alice and Elsie and their heartbroken families, and all those affected by the attack and nobody should put that at risk.
“The police and prosecutors have an important job to do in their investigation, pursuing every avenue and taking the action they need to ahead of the trial.
“We must support them and ensure that everything possible is done to deliver justice.”
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