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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
Image:
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, with their daughters Matilda, Alice and Grace (from left to right).
Image:
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.

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Markets react on second open after budget – as traders concerned over some announcements

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Markets react on second open after budget - as traders concerned over some announcements

The cost of government borrowing has jumped, while UK stocks and the pound are up, as markets digest the news of billions in borrowing and tax rises announced in the budget.

While there was no panic, there had been concern about the scale of borrowing and changes to Chancellor Rachel Reeves’s fiscal rules.

At the market open on Friday, the interest rate on government borrowing stood at 4.476% on its 10-year bonds – the benchmark for state borrowing costs.

It’s down from the high of yesterday afternoon – 4.525% – but a solid upward tick.

The pound also rose to buy $1.29 or €1.1873 after yesterday experiencing the biggest two-day fall in trade-weighted sterling in 18 months.

On the stock market front, the benchmark index, the Financial Times Stock Exchange (FTSE) 100 list of most valuable companies was up 0.36%.

The larger and more UK-focused FTSE 250 also went up by 0.1%.

While there was a definite reaction to the budget, uniquely impacting UK borrowing costs, the response is far smaller than after the UK mini-budget.

Many forces are affecting markets with the upcoming US election on a knife edge and interest rate decisions in both the UK and the US coming on Thursday.

This breaking news story is being updated and more details will be published shortly.

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Budget: Hostile market response as chancellor suffers Halloween nightmare

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Budget: Hostile market response as chancellor suffers Halloween nightmare

First things first: don’t panic.

What you need to know is this. The budget has not gone down well in financial markets. Indeed, it’s gone down about as badly as any budget in recent years, save for Liz Truss’s mini-budget.

The pound is weaker. Government bond yields (essentially, the interest rate the exchequer pays on its debt) have gone up.

That’s precisely the opposite market reaction to the one chancellors like to see after they commend their fiscal statements to the house.

In hindsight, perhaps we shouldn’t be surprised.

After all, the new government just committed itself to considerably more borrowing than its predecessors – about £140bn more borrowing in the coming years. And that money has to be borrowed from someone – namely, financial markets.

But those financial markets are now reassessing how keen they are to lend to the UK.

More on Budget 2024

The upshot is that the pound has fallen quite sharply (the biggest two-day fall in trade-weighted sterling in 18 months) and gilt yields – the interest rate paid by the government – have risen quite sharply.

This was all beginning to crystallise shortly after the budget speech, with yields beginning to rise and the pound beginning to weaken, the moment investors and economists got their hands on the budget documentation.

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Chancellor challenged over gilt yield spike

But the falls in the pound and the rises in the bond yields accelerated today.

This is not, to be absolutely clear, the kind of response any chancellor wants to see after a budget – let alone their first budget in office.

Indeed, I can’t remember another budget which saw as hostile a market response as this one in many years – save for one.

That exception is, of course, the Liz Truss/Kwasi Kwarteng mini-budget of 2022. And here is where you’ll find the silver lining for Keir Starmer and Rachel Reeves.

The rises in gilt yields and falls in sterling in recent hours and days are still far shy of what took place in the run up and aftermath of the mini-budget. This does not yet feel like a crisis moment for UK markets.

But nor is it anything like good news for the government. In fact, it’s pretty awful. Because higher borrowing rates for UK debt mean it (well, us) will end up paying considerably more to service our debt in the coming years.

Rachel Reeves and Chief Secretary to the Treasury Darren Jones prepare to leave 11 Downing Street
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Rachel Reeves leaving 11 Downing Street before the budget. Pic: PA

And that debt is about to balloon dramatically because of the plans laid down by the chancellor this week.

And this is where things get particularly sticky for Ms Reeves.

In that budget documentation, the Office for Budget Responsibility said the chancellor could afford to see those gilt yields rise by about 1.3 percentage points, but then when they exceeded this level, the so-called “headroom” she had against her fiscal rules would evaporate.

Read more:
Chancellor defends £40bn tax rises
Hefty tax and spending plans a huge gamble – analysis

In other words, she’d break those rules – which, recall, are considerably less strict than the ones she inherited from Jeremy Hunt.

Which raises the question: where are those gilt yields right now? How close are they to the danger zone where the chancellor ends up breaking her rules?

Short answer: worryingly close. Because, right now, the yield on five-year government debt (which is the maturity the OBR focuses on most) is more than halfway towards that danger zone – only 56 basis points away from hitting the point where debt interest costs eat up any leeway the chancellor has to avoid breaking her rules.

Now, we are not in crisis territory yet. Nor can every move in currencies and bonds be attributed to this budget.

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Markets are volatile right now. There’s lots going on: a US election next week and a Bank of England decision on interest rates next week.

The chancellor could get lucky. Gilt yields could settle in the coming days. But, right now, the UK, with its high level of public and private debt, with its new government which has just pledged to borrow many billions more in the coming years, is being closely scrutinised by the “bond vigilantes”.

A Halloween nightmare for any chancellor.

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Football financier Harris spearheads £200m bid for Crystal Palace stake

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Football financier Harris spearheads £200m bid for Crystal Palace stake

The football financier Keith Harris is spearheading a bid to buy a 45% stake in the Premier League football club Crystal Palace in a deal that could be worth close to £200m.

Sky News has learnt that Mr Harris is advising a group of businessmen including Zechariah Janjua and Navshir Jaffer on an offer to acquire the shareholding from Eagle Football, a vehicle created by American businessman John Textor and owner of a number of major clubs around the world.

Sources said on Thursday that the consortium advised by Mr Harris was a leading contender to buy the stake in the Eagles, although they cautioned that at least one, and possibly two, other parties were also in discussions with Mr Textor.

Mr Harris’s group, which would probably execute its deal through a recently established corporate vehicle called Sportbank, may also require financing from other investors as part of its plans, the sources added.

Eagle Football is said to be hopeful that a deal to offload its Crystal Palace shareholding would value the club, which recorded its first win of the Premier League campaign against Tottenham Hotspur last weekend, at more than £400m.

Stanley Tang, one of the founders of the US-based food delivery company DoorDash, is also understood to have expressed an interest in acquiring Eagle Football’s stake in Crystal Palace.

A spokesman for Mr Tang denied that he was in discussions to buy Eagle Football’s Crystal Palace stake.

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Mr Textor, who declined to comment, is keen to own a controlling interest in a club in English football’s top flight, and came close to securing a deal to buy Everton during the summer.

Instead, Everton’s long-standing owner agreed a transaction with Dan Friedkin, the owner of Italian Serie A side AS Roma.

Eagle Football’s other footballing interests include Olympique Lyonnais in France, Botafogo, which currently leads Brazil’s top division, and RWD Molenbeek in Belgium.

This week, the holding company issued a statement confirming that it is preparing to file confidentially with US regulators ahead of a public listing in the first quarter of next year.

Sky News revealed in August that Eagle Football had lined up Stifel and TD Cowen, the investment banks, to work on the initial public offering (IPO).

The stake in Crystal Palace is being sold by The Raine Group, which has been involved in recent deals involving Chelsea and Manchester United.

In its statement this week, Eagle Football said it would seek $100m from the sale of shares in the company ahead of an IPO, as well as a further $500m as part of the flotation itself.

It also wants to raise “up to $500m to retire existing senior debt, to be achieved through the sale of its interest in Crystal Palace Football Club and, possibly, the placement of long-term senior notes”.

Collectively, these moves are expected to help Mr Textor achieve an enterprise value for Eagle Football of around $2.3bn (£1.74bn), they said.

In the past, Mr Textor has spoken about his belief that public ownership of football teams provides fans with greater transparency about the running of their clubs.

He has described this as the democratisation of ownership – an issue set to face greater scrutiny now that a bill on football regulation has been reintroduced to parliament by the new Labour government.

Some clubs with listed shares, including Manchester United, have, however, endured a torrid relationship with supporters, partly as a result of their voting rights being controlled by a single dominant shareholder.

Mr Harris declined to comment on Thursday.

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