How the budget could make things worse for millions of working people with extreme money troubles
Lowri Williams is struggling to cover her basic expenses. Earning a low income with very little support, she says she feels like she’s “living hand-to-mouth” and barely getting by.
She’s one of a large group of people in low-income households who are caught in a precarious position, earning too little to comfortably support themselves, but too much to qualify for significant financial help.
For people like Lowri, working more or earning a higher income could mean losing vital support like Universal Credit, leaving them no better off and in some cases even worse off.
Lowri Williams in her home
Higher tax bills for the lowest paid
Lowri’s salary is not high enough to pay tax. But there’s a wider group of low-income earners who are facing a heavy tax burden.
Sky News analysis has found that in the last three years, working people in the bottom 25% of earners have effectively had a 60% tax hike.
This is due to the freeze on personal allowances, introduced in 2021 and scheduled to end in 2028. For each year the freeze is enacted, earners effectively see their tax rates rise in real terms as a higher proportion of their income becomes taxable.
Labour may extend the freeze in their budget this week. If the chancellor proceeds with the plan, around 400,000 people who are currently exempt will find themselves paying income tax, and many current taxpayers will pay higher rates.
On top of this, low to middle-income households are seeing significant stagnation in how much their income is going up, according to analysis of Department for Work and Pensions (DWP) data by the Resolution Foundation.
This finding is part of an upcoming report in November, obtained by Sky News, which will delve deeper into the financial pressures these households face.
Between the mid-1990s and early 2000s, low to middle-income households experienced an almost 50% rise in income. But in the last decade, that growth has slowed dramatically to just 11%.
Fluctuating earnings and a squeeze on benefits
The government is also reportedly considering restricting sickness benefits, a move which may exacerbate the issue.
“Economic vulnerability and insecurity are particularly high among people with ill health or disabilities,” said Alfie Stirling, director of insight and policy at the Joseph Rowntree Foundation.
“Any policy that reduces their support, or limits access to it, will likely worsen hardship and increase the number of people at risk,” he added.
Low income families in these situations can receive state support like Universal Credit to supplement their income.
Universal Credit, first introduced in 2013, combines several state-funded benefits, including housing support, child tax credits, and income support, into one payment. It provides support to households both in and out of work.
Around 2.5 million people in work receive this support, but some, like Lowri, a part-time charity worker, miss out at times due to fluctuating monthly earnings.
Universal Credit is reduced by 55p for every £1 earned, a calculation known as the taper rate. Some people receive an allowance before this reduction, depending on their circumstances.
Lowri, who is impacted by the taper rate, explained: “If you earn over the limit, you lose out immediately. Not only do you lose Universal Credit, but also your council tax benefit, which is another £150 a month.
“So, while you might earn £50 more, you could end up £100 worse off.”
“Every penny you have coming in is paying just bills,” she said.
Finding ways to save
Below is Lowri’s household expenditure for some essential bills.
While she’s able to receive UC, she’s eligible for social tariffs, which are a discounted package for household bills, which could help her save.
This could amount to a saving of nearly £70 for Lowri’s mobile and broadband budget, according to analysis by Nous, an AI-powered bill-tracking tool.
With social tariffs in place, her water bill could be cut in half.
The National Living Wage
While Lowri’s income means she doesn’t pay tax, people on the National Living Wage (NLW), £11.44 per hour (£22,308 annually), who earn more than her, are heavily affected by tax and benefits decisions made by the Conservative government, which Labour are reportedly proposing to extend.
At the budget in March, the NLW increased by 10%.
The chancellor may announce a further hike in the NLW at this week’s budget, which sounds like good news.
But Lalitha Try, economist at the Resolution Foundation says: “Our research shows that the introduction and ramping up of the minimum wage has delivered a major living standards boost to lower income families over the past 25 years.
“But it’s important to recognise that there are limits to what it can achieve. For workers on Universal Credit, over half of the wage gains will be clawed back through lower benefit entitlement.
And the minimum wage can’t help those who may earn more than the legal minimum but struggle with low hours or high housing costs. Other policies are needed to solve those challenges.”
Losing access to support like Universal Credit could also mean people no longer qualify for things like social tariffs and free school meals.
On top of that, the freezing of the personal allowance thresholds which heavily affects the lowest 25% of earners in the UK has also had a significant impact on people earning the NLW.
The amount of tax that someone working full time on the living wage will pay annually in 2024/2025 is over £1,000 more in real terms than it was in 2019/2020.
That’s a lot of money for someone earning just over £22,000 per year.
It means their effective tax rate has almost doubled, from 4.4% to 8.7%, in five years.
These are only a few examples of how an increase in NLW means they have less money in their pockets.
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How much does this family spend per month?
Two salaries and still struggling
It’s a similar story for people on what is meant to be a more comfortable income.
Chris and Tracey Matthewman, who live with their three daughters in Basildon, Essex, are among the tens of millions of people living below the Minimum Income Standard (MIS).
This is the amount the Joseph Rowntree Foundation defines as necessary for an acceptable standard of living.
It goes beyond just food, clothing, and shelter; it includes the ability to participate in society, such as being able to socialise and having access to technology.
In 2024, the MIS was £28,000 for a single person and £69,400 for a couple with two children.
Tracey teaches in a primary school and Chris looks after the fleet of vehicles his company uses.
The Matthewman family
The Matthewman household income is below the Minimum Income Standard (MIS) for a family of their size, a little over £80,000 in total.
After tax, their combined household income is around £4,000 a month. A lot of that gets spent on energy bills and council tax, not to mention other essentials.
Chris is clearly worried about how to keep the family afloat. When I visited his home he repeatedly showed me his detailed spreadsheet which he uses to meticulously track his family’s expenses.
Chris says: “It’s frustrating. We have to accept living paycheque to paycheque, just surviving month to month.”
And Tracey had this message for Rachel Reeves, the chancellor, ahead of Labour’s budget: “They need to remember that there are people living in this country who don’t receive any benefits and are still struggling.”
“We’re in that demographic that ends up paying more – more national insurance, more tax. We keep tightening up, but we’re not eligible for any benefits. That’s tough.”
Additional reporting: Daniel Dunford, Senior Data Journalist
The Data and Forensics team is a multi-skilled unit dedicated to providing transparent journalism from Sky News. We gather, analyse and visualise data to tell data-driven stories. We combine traditional reporting skills with advanced analysis of satellite images, social media and other open source information. Through multimedia storytelling, we aim to better explain the world while also showing how our journalism is done.
UK
British tourist who fell ill from methanol poisoning dies after ‘free shots’ giveaway in Laos resort
A British tourist being treated after a suspected mass methanol poisoning in Laos has died, according to UK officials.
Simone White, 28, from Orpington, Kent, fell ill after reportedly drinking “free shots” from a local bar in Vang Vieng – a resort popular with backpackers.
Four people had already died following the suspected poisonings – an Australian named Bianca Jones, 19, from Melbourne, as well as two Danish women in their 20s and a 56-year-old US citizen.
They are believed to have consumed drinks tainted with methanol, which is sometimes added to mixed drinks as a cheaper alternative to alcohol, but can cause severe poisoning or death.
“We are supporting the family of a British woman who has died in Laos, and we are in contact with the local authorities,” the UK’s Foreign, Commonwealth and Development Office (FCDO) said in a statement.
The FCDO said it was also providing consular assistance to other British nationals hospitalised in the incident, as well as their families.
Bianca Jones, a 19-year-old from Australia, also died
Explained:
What is methanol, how does it end up in alcoholic drinks, and how can you avoid it?
Ms White was an associate lawyer specialising in intellectual property and technology and worked at the London office of the American law firm Squire Patton Boggs.
Her work involved general commercial matters, and contentious and non-contentious intellectual property law issues, according to the firm’s website.
Bethany Clarke, a friend of Ms White and a healthcare worker, also from Orpington, said a group of six people had been taken to hospital after drinking from the same bar.
She posted on a Laos Backpacking Facebook group to warn other travellers after the group fell ill.
“Urgent – please avoid all local spirits. Our group stayed in Vang Vieng and we drank free shots offered by one of the bars,” she wrote.
“Just avoid them as so not worth it. Six of us who drank from the same place are in hospital currently with methanol poisoning.”
‘Every parent’s very worst fear’
Australian Prime Minister Anthony Albanese confirmed to his country’s parliament that 19-year-old Bianca Jones had died after being evacuated to a Thai hospital from Vang Vieng.
Thai authorities confirmed that Jones had died of “brain swelling due to high levels of methanol found in her system”.
Her friend Holly Bowles, also 19, remains in hospital in neighbouring Thailand, Mr Albanese said.
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Laos methanol poisonings – what we know
Australian officials said “several foreign nationals” had also been victims of methanol poisoning
“This is every parent’s very worst fear and a nightmare that no one should have to endure,” Mr Albanese said.
“We also take this moment to say that we’re thinking of Bianca’s friend Holly Bowles who is fighting for her life.”
‘Her incredible spirit touched so many lives’
In a statement to the Melbourne Herald Sun newspaper, Ms Jones’ family paid tribute to her.
“She was surrounded by love, and we are comforted by the knowledge that her incredible spirit touched so many lives during her time with us,” the family wrote.
“We want to express our deepest gratitude for the overwhelming support, love, and prayers we’ve received from across Australia.”
The US State Department confirmed that an American had also died in Vang Vieng, and Denmark’s Foreign Ministry said two of its citizens had also died in “the incident in Laos”.
Neither would comment directly on a link to methanol poisoning.
The second named storm of the season will bring snow, rain and strong winds to parts of the UK this weekend, according to the Met Office.
Hundreds of schools are closed as the storm, named Bert, sweeps in, bringing freezing temperatures and snow over the weekend.
Wind gusts of up to 70mph are expected in some areas as well as the potential of flooding and travel disruption.
Heavy snowfall could bring further disruption to parts of the country while heavy rain is also likely over the weekend, the Met Office added.
Snowy conditions, in the village of Goathland, North York Moors National Park.
Pic: PA
Parts of southwest England including Plymouth and Exeter are under a yellow warning for snow until 3pm today, with 5-10cm predicted in higher parts of Dartmoor.
Wintry showers will continue in different parts of the UK throughout Thursday and Friday, amid warnings of snow and ice for much of Scotland, northern England and parts of western and eastern England and Wales between midday today and 10am tomorrow.
How Storm Bert is set to impact the UK this weekend. Pic: Met Office
Met Office chief meteorologist Matthew Lehnert said: “A northerly airflow will continue to feed snow showers into Scotland over the next few days, with this reaching lower levels at times and bringing the potential for some travel disruption.
“Overnight temperatures will drop below zero fairly widely over the next few days, which has resulted in some ice warnings, with further warnings likely through this week.”
More than 114 schools are shut in the Highland Council area today due to snow, including Inverness Royal Academy where pupils were told their prelim exams planned for the day would be rescheduled.
Almost 40 schools in Aberdeenshire are also shut while many others had delayed openings, and in Moray around 12 were closed and others opened late.
It comes after more than 100 schools or nurseries were closed in Scotland yesterday because of the weather.
Commuters dressed in warm clothes walk over Westminster Bridge.
Pic: Reuters
South of the border, 89 schools were shut in Devon today, 18 in Dorset and 60 in Cornwall, while in Wales around 10 were closed in Conwy, 18 in Denbighshire and two in Wrexham.
As Storm Bert hits the UK, areas where warnings are in place in the south and west are likely to be impacted by heavy rain on Saturday and Sunday.
Between 50-75 mm of rainfall is expected there on the weekend, while Wales and southwest England could see more than 100mm.
There is already a yellow warning for heavy snow on Saturday followed by a “rapid thaw” and rain on Saturday night in northeast and northwest England, the West Midlands, Yorkshire, and much of Scotland.
Met Office Deputy Chief Meteorologist, Dan Holley, said: “Storm Bert marks a shift to much milder air and wintry hazards will gradually diminish through the weekend, but heavy snowfall is expected across parts of northern England and Scotland for a time on Saturday, especially over higher ground, and warnings are in place.”
A man has been found guilty of murdering his “best friend” on Christmas Eve.
A jury of 10 men and two women heard Dylan Thomas, 24, killed William Bush, 23, in a “frenzied attack” in the Llandaff area of Cardiff last year.
Thomas had previously pleaded guilty to manslaughter by diminished responsibility but denied Mr Bush’s murder.
A trial at Cardiff Crown Court heard Thomas attacked Mr Bush “from behind” in his bedroom after he entered through the kitchen at the property they shared, owned by the defendant’s grandparents.
During the “sustained attack” Mr Bush “fled for his life” down two flights of stairs and onto the patio, the trial heard.
William Bush. Pic: South Wales Police
Mr Bush sustained 37 stab wounds in total, including 21 to the neck.
His cause of death was given as “multiple stab wounds to the neck and trunk”.
The defendant, who was wearing a blue t-shirt, attended the hearing via video link from a secure hospital.
The jury returned a unanimous verdict on Thursday afternoon after just over three hours of deliberation.
Thomas, who was suffering from schizophrenia, had initially claimed he was acting in self-defence.
‘Clear thinking’
The court heard how Mr Bush was Thomas’s “only known real friend”.
During the trial, it was also heard how Thomas had been arrested “for trying to climb into Buckingham Palace” some weeks previously.
He also wrote to Elon Musk telling him he believed he had the ability to harness gravity.
The defendant was staying with his grandmother in Rhoose, the Vale of Glamorgan, on the night before the attack.
In the early hours of Christmas Eve, the jury heard Thomas had carried out an online search for the “anatomy of the neck”.
Thomas, who could not drive, enquired about getting an Uber to Tŷ Matthew in Llandaff at 3.31am.
Later that morning, his grandmother agreed to take him to the house after he told her he “wanted to walk the dog” and they left her home in Rhoose at 10.41am.
He had sent several messages to Mr Bush in the hours before the attack in which he said he needed to see him before Mr Bush went home to Brecon to spend Christmas with his family.
The prosecution argued there was “clear thinking on the part of Dylan Thomas”.
“This was a frenzied attack where Mr Thomas could only have had one intention and that was to kill Mr Bush,” said Gregory Bull KC, prosecuting.
Read more from Sky News:
Storm Bert to bring 70mph winds to UK
Banana duct-taped to a wall sells for $6.2m
But the defence argued Mr Bush’s schizophrenia lay “at the centre” of the case.
“He didn’t understand, because he was deluded. He believed, for whatever reason, that his best friend was threatening his life,” said defence barrister Orlando Pownall KC.
Thomas will be sentenced on Monday 16 December.
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