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The UK’s new Prime Minister, Andy Burnham, enters office at a time when many continue to feel financially stretched. While inflation has fallen significantly from its peak, household budgets remain under pressure, wage growth is slowing and many families have little financial resilience if faced with an unexpected expense.
One of the his key messages to ministers during his first cabinet meeting as PM is “we need to be a cost of living government”. But how exactly will Andy Burnham deliver on his message?
VAT to be cut from household electricity bills in October
From 1 October, VAT on domestic energy bills will be reduced from 5% to 0%, saving the average household around £45 per year.
The government says the measure will be funded by savings made after scrapping the proposed digital ID programme. The programme was expected to cost £1.8 billion over the next three years, with an estimated £850 million due to be spent during the current financial year.
Personal allowance rise
Burnham says he will look at allowing people to earn more before they start paying income tax, shifting the so-called personal allowance. Burnham has also hinted at “asking for a little bit more” in tax from some people.
Cost of living crisis evolving
Recent analysis by the Work Foundation at Lancaster University highlights that the cost of living crisis has evolved rather than disappeared. Although price rises have slowed, everyday essentials such as food, housing, transport and energy remain considerably more expensive than they were just a few years ago.
For many workers, financial wellbeing continues to be one of the biggest factors affecting both their personal lives and their performance at work.
Government cannot solve financial wellbeing alone
Much attention will naturally focus on what the renewed Government does next. Measures to improve living standards, support household finances and stimulate economic growth will all play an important role.
But improving financial wellbeing isn’t solely a policy challenge.
Employers have become increasingly aware that financial stress affects productivity, engagement, absence, recruitment and retention. Even where businesses are unable to offer significant pay increases, there are still meaningful ways they can help employees feel more financially secure.
Financial education remains one of the biggest opportunities
The Work Foundation’s research suggests that many employers intend to expand their support through benefits, flexible working and one-off payments where possible. These initiatives can make a genuine difference.
However, one area that often delivers lasting value without requiring continual increases in payroll costs is financial education.
Many employees simply don’t know whether they are making the most of their workplace pension, employee benefits or available tax allowances. Others may be unsure how to budget effectively, manage debt, prepare for retirement or build financial resilience.
Helping employees improve their financial knowledge gives them greater confidence to make informed decisions throughout their lives.
Guidance versus advice
Not every employee needs regulated financial advice. In many cases, people simply need someone to explain how pensions work, what options are available through their employer, or how to prioritise competing financial goals. That’s where financial guidance can play a valuable role.
Providing access to workshops, webinars and one-to-one Money Guide sessions allows employees to ask questions in a safe environment, improve their understanding and know when regulated advice may be appropriate.
For employers, this creates a scalable way to support the entire workforce rather than only those approaching retirement.
Making existing benefits work harder
Many organisations already offer valuable financial benefits without realising employees aren’t engaging with them.
Salary sacrifice arrangements, workplace pensions, life assurance, employee assistance programmes, discount platforms and financial wellbeing resources can all provide significant value but only if employees understand how to use them.
Improving communication around these benefits is often one of the quickest and most cost-effective ways to increase their impact.
A partnership between Government and employers
Government has an important role in creating the conditions for higher living standards through economic policy, employment rights and targeted support for households.
Employers, meanwhile, can help employees build long-term financial resilience by creating workplaces where financial wellbeing is taken seriously.
That means investing in education, encouraging pension engagement, providing access to trusted financial wellbeing support and creating opportunities for employees to build confidence in managing their money.
Looking ahead
As the new Government sets out its priorities, employers have an opportunity to strengthen their own approach to financial wellbeing.
Supporting employees isn’t always about increasing salaries. Sometimes the greatest impact comes from helping people understand the financial decisions they face every day.
At Planned Future, we believe financial wellbeing is built through knowledge, confidence and access to trusted guidance. Our workshops, Money Guide Service and workplace financial wellbeing programmes help employees make informed decisions about their money, supporting better outcomes for both individuals and organisations.
Employers who continue investing in their people’s financial wellbeing will be better placed to build resilient, engaged and productive workforces, whatever the wider economic climate.
