Money Matters: Spring Budget – what you might have missed
In this week’s Money Matters column, Wrekin’s Debt and Energy Manager Dan Bebbington looks at some of the measures announced in the spring budget that you might have missed.
It’s fair to say that last week’s Spring Statement was a mixed bag when it came to helping people who are struggling during this cost-of-living crisis.
Whilst the cut to National Insurance and the changes to Child Benefit charge threshold grabbed the headlines, there were many other announcements that went under the radar.
There were big changes to the rules for Debt Relief Orders (DROs).
DROs are a form of insolvency for people who have little or no spare income to be able to make any payments towards their debts and who only have low value assets. Introduced 15 years ago, a DRO is a way of 'writing off' your debts, if their financial situation does not improve over a 12-month period.
DRO’s require a £90 fee and many people who are in debt struggle to afford this payment. Meaning it can be a slow and difficult process to try to save up the £90, particularly if you’re in a negative budget with no room for manoeuvre.
The Government announced from April of this year the £90 fee is abolished. This is a huge change to Debt Advice legislation and welcome one for many who are financially trapped and sinking further into debt.
In addition, from 28 June 2024, the maximum amount of debt you can have under a DRO will rise from £30,000 to £50,000 – meaning more people will be able to access this debt management option. To add to this, you'll be able to keep your car worth up to £4,000 (up from £2,000 currently).
A car is essential for many people who need DROs as these are often people who are in work such as care night shift workers and particularly those juggling work and children. However, the second-hand car market has seen a continuous price rise since 2020, posing a barrier to debt relief for many who are in dire need of it.
It’s worth noting, many individuals who were excluded from DROs due to the current criteria, should speak to their advisor to see if they are now eligible under the new rules. Many people may have opted for a Debt Management Plan, Token Offer Repayments or an IVA – realistically they should be proactively contacted to be reassessed under the new FCAs Consumer Duty rules.
The existing Household Support Fund scheme, which had been due to end on 31 March 2024 following the Autumn 2023 budget will be extended for six months, to September 2024 (other UK nations will also get funding under the Barnett formula).
The scheme gives Local Authorities funding to support vulnerable households with paying for essentials, such as energy and water bills, rent, food and more – the exact form of the support is dependent on your Local Authority. You can contact your council to find out more about their offers, whether your eligible and how to apply
Universal Credit claimants will get more time to repay 'Budgeting Advance' loans. Budgeting Advance Loans are small interest free loans paid by Universal Credit but claimed back through a deduction in benefit over the course for 12 months. The government announced these would now be extended to 24 moths, effectively reducing the monthly repayment amount.
13th March 2024