18 October 2023 , 06:33
888
0
Rishi Sunak is under pressure not to impose a real terms benefits cut on millions of people in April.
The rate of Consumer Price Index inflation was 6.7% in September, the same as in August, the Office for National Statistics said. It remains well above the Bank of England's 2% target.
Benefits such as Universal Credit are usually increased in April in line with the inflation rate from the previous September. But the Prime Minister has notable resisted to commit to the move as ministers grapple with the dire state of the public finances.
Chancellor Jeremy Hunt is expected to set out his plans in next month's Autumn Statement. With inflation expected to be lower in the Spring, he may decide that a 7% rise would be too high. Benefits would still technically rise - but this increase could be dwarfed by soaring prices, meaning it is effectively a cut in real-terms.
Alfie Stirling, Joseph Rowntree Foundation Chief Economist, said: “For ministers to cast doubt on whether they will deliver this uprating in full is unacceptable. Millions of families need the certainty that benefit payments will begin to recover some of the significant real terms losses suffered over the past two years, and they need that certainty now."
Teachers, civil servants and train drivers walk out in biggest strike in decade
Becca Lyon, head of child poverty at Save the Children UK, urged minister to "do the right thing" and uprate benefits in line with rising prices. She said: “Inflation remains at 6.7% and so does the strain on struggling families’ finances. Now would be the worst time to cut the incomes of those pushed to the brink. The cost of living crisis is not easing for low-income families who are constantly worrying about falling behind on their energy bills and rent or getting into debt."
Should benefits rise in line with inflation? Vote in our poll HERE to have your say.
Lib Dem Treasury spokeswoman Sarah Olney said: "People are struggling to put food on the table, pay their mortgage bill and heat their home, yet this Government doesn’t seem to care. The very least ministers could do is offer struggling families and pensioners some reassurance, by committing to properly raising benefits in line with inflation and protecting the triple lock on pensions.”
The state pension can also be increased in line with inflation as part of the "triple lock" commitment, which delivers a hike dependent on which is higher - inflation, average pay or 2.5%. Figures released last month show average pay - including bonuses - went up by 8.5% between May and July. This means the state pension will go up by at least the same amount because of the so-called triple lock.
The Institute for Fiscal Studies has said that an 8.5% rise in the full state pension would cost £2 billion more than has been budgeted for in 2024–25. It means a full basic state pension going from £156.20 per week to £169.50.
Last year, benefits were increased by 10.1% - the same as state pensions. But this year, inflation is lower than wage growth, meaning welfare payments will not rise at the same level as state pension payments.
Speculation has been mounting over whether Rishi Sunak will maintain the state pension guarantee in its current form, which was a Tory manifesto commitment. But Chancellor Jeremy Hunt signalled that he was planning to keep it at Tory conference last month. He told a Centre for Policy Studies event: "I think that we have to be very careful not to break manifesto promises."
ONS chief economist Grant Fitzner said: "After last month's fall, annual inflation was unchanged in September. Food and non-alcoholic drinks prices eased again across a range of items with the cost of household appliances and air fares also falling this month. These were offset by rising prices for motor fuels and the cost of hotel stays."
* Follow Mirror Politics on,, and.