More than a million households could benefit from Universal Credit changes, set to be unveiled in the autumn budget this week.
Labour has been considering lowering the cap on deductions that can be taken from benefit payments by up to £420 a year. If it goes ahead it could benefit 1.2 million households around the country, including 700,000 families with children.
The new Fair Repayment Rate, proposed Work and Pensions Secretary Liz Kendall, could come into force in April 2025 and cap deductions at 15 per cent rather than the current 25 per cent.
This is money the government can take off a Universal Credit claimant's allowance to help them make debt repayments.
These deductions can cover a range of debts, including benefit advances, historical overpayments of child tax credits, rent and council tax arrears.
They are deducted from claimant's Universal Credit standard allowance each month until the debt is paid off, but many have complained it puts vulnerable people into severe hardship.
While this may take longer to repay debts, it could be a lifeline to some of the poorest households, already struggling with spiralling costs.
When will the 2024 Autumn Budget take place?
The 2024 Autumn Budget will be held on Wednesday, October 30 shortly after 12:30pm. This is expected to last approximately an hour.
The last budget was held under the previous government and took place during the last Parliament on March 6, 2024.
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How to watch the Autumn Budget
Those wishing to watch this year's Autumn Budget can do so on the BBC and BBC News website. It will also be available to stream on Parliament TV.
The budget will be delivered by Chancellor Rachel Reeves with the first phase of the statement typically beginning with a review of the nation's finances before setting out proposals from the government.
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