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.
A care worker who reported the alleged abuse of an elderly care home resident, which triggered a criminal investigation, is facing destitution and potential removal from Britain after speaking up.
“Meera”, whose name we have changed to protect her identity, said she witnessed an elderly male resident being punched several times in the back by a carer at the home where she worked.
Sky News is unable to name the care home for legal reasons because of the ongoing police investigation.
“I was [a] whistleblower there,” said Meera, who came to the UK from India last year to work at the home.
“Instead of addressing things, they fired me… I told them everything and they made me feel like I am criminal. I am not criminal, I am saving lives,” she added.
‘Meera’ spoke up about abuse she said she witnessed in the care home where she worked
Like thousands of foreign care workers, Meera’s employer sponsored her visa. Unless she can find another sponsor, she now faces the prospect of removal from the country.
“I am in trouble right now and no one is trying to help me,” she said.
Meera said she reported the alleged abuse to her bosses, but was called to a meeting with a manager and told to “change your statement, otherwise we will dismiss you”.
She refused. The following month, she was sacked.
The care home claimed she failed to perform to the required standard in the job.
She went to the police to report the alleged abuse and since then, a number of people from the care home have been arrested. They remain under investigation.
‘Migrants recruited because many are too afraid to speak out’
The home has capacity for over 60 residents. It is unclear if the care home residents or their relatives know about the police investigation or claim of physical abuse.
Since the arrests, the regulator, the Care Quality Commission (CQC), carried out an investigation at the home triggered by the concerns – but the home retained its ‘good’ rating.
Meera has had no reassurance from the authorities that she will be allowed to remain in Britain.
In order to stay, she’ll need to find another care home to sponsor her which she believes will be impossible without references from her previous employer.
She warned families: “I just want to know people in care homes like these… your person, your father, your parents, is not safe.”
She claimed some care homes have preferred to recruit migrants because many are too afraid to speak out.
“You hire local staff, they know the legal rights,” she said. “They can complain, they can work anywhere… they can raise [their] voice,” she said.
Sky’s Becky Johnson spoke to ‘Meera’
Sky News has reported widespread exploitation of care visas and migrant care workers.
Read more:
More than 100 migrants face being in UK illegally
Immigration crackdown will fuel ‘exodus’ of nurses
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Currently migrants make up around a third of the adult social care workforce, with the majority here on visas that are sponsored by their employers.
As part of measures announced in April in the government’s immigration white paper, the care visa route will be closed, meaning care homes will no longer be able to recruit abroad.
‘Whole system is based on power imbalance’
But the chief executive of the Work Rights Centre, a charity that helps migrants with employment issues, is warning that little will change for the tens of thousands of foreign care workers already here.
“The whole system is based on power imbalance and the government announcement doesn’t change that,” Dr Dora-Olivia Vicol told Sky News.
She linked the conditions for workers to poor care for residents.
Work Rights Centre CEO Dr Dora-Olivia Vicol
“I think the power that employers have over migrant workers’ visas really makes a terrible contribution to the quality of care,” she said.
Imran agrees. He came to the UK from Bangladesh, sponsored by a care company unrelated to the one Meera worked for. He says he frequently had to work 14-hour shifts with no break because there weren’t enough staff. He too believes vulnerable people are being put at risk by the working conditions of their carers.
Migrant workers ‘threatened’ over visas
“For four clients, there is [a] minimum requirement for two or three staff. I was doing [it] alone,” he said, in broken English.
“When I try to speak, they just directly threaten me about my visa,” he said.
“I knew two or three of my colleagues, they are facing the same issue like me. But they’re still afraid to speak up because of the visa.”
A government spokesperson called what happened to Imran and Meera “shocking”.
“No one should go to work in fear of their employer, and all employees have a right to speak up if they witness poor practice and care.”
James Bullion, from the CQC, told Sky News it acts on intelligence passed to it to ensure people stay safe in care settings.
Additional research by Leah Adin
Donald Trump may be denied the honour of addressing parliament on his state visit to the UK later this year, with no formal request yet submitted for him to be given that privilege.
It comes after President Macron’s successful state visit this week, in which he was invited to speak in front of both Houses of Parliament.
Sky News has been told the Speaker of the House of Commons, Sir Lindsay Hoyle, hasn’t so far received a request to invite the US president to speak in parliament when he is expected to visit in September.
It was confirmed to MPs who have raised concerns about the US president being allowed to address both houses.
Kate Osborne, Labour MP for Jarrow and Gateshead East, wrote to the speaker in April asking him to stop Mr Trump from addressing parliament, and tabled an early-day motion outlining her concerns.
“I was happy to see Macron here but feel very differently about Trump,” she said.
“Trump has made some very uncomfortable and worrying comments around the UK government, democracy, the Middle East, particularly around equalities and, of course, Ukraine.
“So, I think there are many reasons why, when we’re looking at a state visit, we should be looking at why they’re being afforded that privilege. Because, of course, it is a privilege for somebody to come and address both of the houses.”
But the timing of the visit may mean that any diplomatic sensitivities, or perceptions of a snub, could be avoided.
France’s President Emmanuel Macron addressed parliament during his state visit this month
Lord Ricketts, a former UK ambassador to France, pointed out that parliament isn’t sitting for much of September, and that could help resolve the issue.
In 2017, he wrote a public letter questioning the decision to give Donald Trump his first state visit, saying it put Queen Elizabeth II in a “very difficult position”.
Parliament rises from 16 September until 13 October due to party conferences.
The dates for the state visit haven’t yet been confirmed by Buckingham Palace or the government.
However, they have not denied that it will take place in September, after Mr Trump appeared to confirm they were planning to hold the state visit that month. The palace confirmed this week that the formal planning for his arrival had begun.
With the King likely to still be in Scotland in early September for events such as the Braemar Gathering, and the anniversary of his accession and the death of Queen Elizabeth on the 8th September, it may be expected that the visit would take place sometime from mid to the end of September, also taking into consideration the dates of the Labour Party conference starting on the 28th September and possibly the Lib Dem’s conference from the 20th-23rd.
Mr Trump has said he believes the trip to the UK will take place in September. Pic: Reuters
When asked about parliamentary recess potentially solving the issue, Ms Osborne said: “It may be a way of dealing with it in a very diplomatic way… I don’t know how much control we have over Trump’s diary.
“But if we can manoeuvre it in a way that means that the House isn’t sitting, then that seems like a good solution, maybe not perfect, because I’d actually like him to know that he’s not welcome.”
A message from the speaker’s office, seen by Sky News, says: “Formal addresses to both Houses of Parliament are not automatically included in the itinerary of such a state visit.
“Whether a foreign head of state addresses parliament, during a state visit or otherwise, is part of the planning decisions.”
Mr Trump made his first state visit to the UK in June 2019 during his first presidency. File pic: Reuters
It’s understood that if the government agrees to a joint address to parliament, the Lord Chamberlain’s office writes to the two speakers, on behalf of the King, to ask them to host this.
It will be Mr Trump’s second state visit.
During his first, in 2019, he didn’t address parliament, despite the fact that his predecessor, Barack Obama, was asked to do so.
It was unclear if this was due to the fact John Bercow, the speaker at the time, made it clear he wasn’t welcome to do so.
However, it didn’t appear to dampen Mr Trump’s excitement about his time with the Royal Family.
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Speaking earlier this year, he described his state visit as “a fest” adding “it’s an honour… I’m a friend of Charles, I have great respect for King Charles and the family, William; we have really just a great respect for the family. And I think they’re setting a date for September.”
It is expected that, like Mr Macron, the pageantry for his trip this time will revolve around Windsor, with refurbishment taking place at Buckingham Palace.
Liverpool have retired the number 20 shirt in honour of Diogo Jota – the first time it has made such a gesture.
The club said it was a “unique tribute to a uniquely wonderful person” and the decision was made in consultation with his wife and family.
The number 20 will be retired at all levels, including the men’s and women’s first teams and academy squads.
A statement said: “It was the number he wore with pride and distinction, leading us to countless victories in the process – and Diogo Jota will forever be Liverpool Football Club’s number 20.”
The club called it a “recognition of not only the immeasurable contribution our lad from Portugal made to the Reds’ on-pitch successes over the last five years, but also the profound personal impact he had on his teammates, colleagues and supporters and the everlasting connections he built with them”.
Jota’s wife joined Liverpool players to view tributes at Anfield on Friday. Pic: Liverpool FC
Pic: Liverpool FC
Newly-married Jota died alongside his brother when his Lamborghini crashed in northern Spain on 3 July.
Police said this week that all the evidence so far suggests Jota was the one driving the vehicle.
Liverpool teammates joined members of Jota’s family, including his wife Rute, at a huge memorial site outside Anfield on Friday.
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A fan looks at messages on a memorial wall near Anfield. Pic: Reuters
Virgil van Dijk and Andy Robertson were among players at the funeral. Pic: Reuters
The star’s funeral took place last weekend, with Liverpool colleagues and members of the Portuguese national team in attendance.
Reds captain Virgil van Dijk carried a shirt bearing the number 20 made from flowers.
Liverpool players returned to the club’s training ground for the start of pre-season on Tuesday.
Their first game since Jota’s death will be on Sunday when they play a friendly away against Preston North End.
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