In a recent press release the government confirmed the following policies to support household incomes from 1 April 2024.
- The National Living Wage has officially risen from £10.42 an hour to £11.44. This marks a £1,800 annual boost to full-time workers’ pay packets. This means nobody over 21 will earn less than two-thirds of the average hourly wage increase – putting more money in the pockets of around 3 million of UK’s lowest paid workers.
- Households will also save around £250 a year on average thanks to a drop in energy bills introduced by Ofgem. This marks a 12.3% fall from the previous quarter, which brings prices down to their lowest since Russia’s invasion of Ukraine in February 2022.
- An increase to the Local Housing Allowance means some of the poorest families on either Universal Credit or Housing Benefit will gain around £800 a year on average.
- Additionally, these changes run alongside the roll out of 15 hours of free childcare, which will save working parents an average of £3,450 a year – the first stage in the £8 billion childcare package that was announced by the Chancellor last year.
Clearly the recent increases in inflation have had a major impact on spending power and although the above measures are welcomed, the real increases in purchasing power are to some extent reduced by the continuing increase in prices.
However, since October 2022, the Consumer Prices Index (CPI) has already more than halved from 11.1% to 3.4%. This is stabilising the financial situation for many families, and the government expects that by Quarter 4 2024 (October-December) CPI will have fallen to 1.4%.
