UK government refuses to confirm whether benefits will increase with inflation

Liz Truss and Kwasi Kwarteng have declined to confirm whether the benefits rate will increase despite the rising cost of inflation. 

In the last few weeks, Downing Street has signalled it must cut millions of public spending to pay for its proposed tax cuts.  

In April, the government announced they would be increasing the benefits rate in line with people’s wages rather than inflation. 

However, according to the Joseph Rowntree Foundation (JRF), increasing benefits by 5.4% to be in line with September earnings, will cause the biggest permanent real-term cut to the basic rate of benefits made in a single year.  

It estimates the poorest 10% of families would lose 2.6% of their income once personal tax charges are factored in and the richest 10% of families would gain 4.3%. 

Currently, benefits claimants are already enduring a real-terms cut according to JRF. The April 2022 uprating was the biggest fall in the value of the basic rate of unemployment benefits in 50 years. 

The government attempted to defend themselves by arguing claimants would ‘catch up’ next year when the September 2022 rate of CPI inflation would be reflected in the April 2023 benefit rises. 

UK government have also stated that increasing benefits in line with average earnings will encourage people to go out and work.  

However, the JRF have estimated that around 2.2 million people who are on universal credit and do not work and around 2.1 million are not expected to, due to being too ill.  

Katie Schmuecker, Principal Policy Adviser at the Joseph Rowntree Foundation said: ‘People living on low incomes need reassurance that the government will raise benefits in line with inflation as usual.  

‘The Prime Minister felt able to give assurance to pensioners, now she must be clear that she won’t target cuts at people whose incomes are already falling so far short of what they need. 

‘Anything below inflation will amount to the largest permanent deliberate real-terms cut to the basic rate of benefits in history. People are already going without as the cost of essentials soars.’ 

Benefits are calculated in April using September’s CPI inflation rate, with figures for next year’s increase set to be announced on 19th October. 

In April 2022, September’s 2021 figure was used even though inflation rates had more than doubled.     

Photo by Jorge Percival