Beyond Sticking Plasters: The need for long-term solutions to UK poverty

How much money does a household need to get by without being at risk of problem debt, or having to go without basic essential needs like food, heating or clothing? It’s a genuine question, and at StepChange we think it’s an important one for Chancellor Rachel Reeves to consider in advance of her Autumn Budget on 30 October.

Debt can and does happen to anyone. But the lower people’s initial income was to start with, the more likely it is that a financial blip leads to getting entrenched in a debt spiral – with the greater risk that people will have to go without basic essentials.

There are some quick wins that would alleviate pressures on households struggling to make ends meet. Like many other charities, we worry that the continuation of the two-child limit and benefit cap are driving poverty.

Many children who bear no responsibility and have no control over their situation are caught in the pernicious trap of poverty and the negative impacts of household debt. All too often, people are also seeing deductions made from their benefits to repay historical debts, leaving them without enough income to cover basic needs.

This can’t be right, and we’d like to see the Budget recognise and resolve both problems.

We will be looking for the government to follow-up its welcome decision to extend the Household Support Fund, which provides emergency help with bills and essentials for those in crisis, to March next year with plans for a permanent scheme building on the good local practice that has been developed since the Fund was initially established in the pandemic.

Also pressingly, as we move from Autumn towards Winter, we need action from the Government to reduce the risk of households shivering through the cold months as they can’t afford heating. Energy bills are still higher than in the past, and energy arrears have reached over £3bn and are still increasing.

We would like to see the government put in place a social tariff for those at risk of fuel poverty, building on the Warm Home Discount Scheme, and create a “Help to Repay” scheme to support people struggling with energy debt.

Council tax arrears have also built up to levels that create a major burden on households as well as local authorities, who all too often continue to use draconian and inappropriate enforcement measures such as frightening and expensive bailiff action, when the real problem is not lack of willingness but lack of capacity to repay.

Increasing support with council tax bills, which has fallen significantly following the devolution of council tax support over a decade ago even as bills increase, must be a priority over this Parliament.

In the long run, we would really like to see the Government take steps to establish a Minimum Income Commission so there’s a chance to answer the question of what needs must be met to meet essential needs and prevent problem debt, and then ensure that benefit levels match what’s needed.

While this won’t solve the most pressing problems overnight, it would provide a clear evidence base on which to build a safety net fit for the future.

It’s clear that there’s a great deal that we need to see the government doing in this budget and in the short term to begin to put right some of these issues that have built up over a longer time period.

Yet it’s just as important that we see the beginning of a plan to ensure we don’t end up just putting sticking plasters on the wounds. A properly supported debt advice sector, and a new financial inclusion strategy bringing all relevant stakeholders together to create a blueprint for the future, should run alongside these interventions.

The long-term objective, that the budget needs to set the tone for, should be to ensure that we never again end up in a situation where so many financially vulnerable households remain in such dire straits for so long.