CPAG: Uprating benefits by inflation

CPAG: Uprating benefits by inflation

Jon Cruddas MP was recently contacted by the Child Poverty Action Group (CPAG) in regard to uprating benefits by inflation.

The CPAG published research showing that if benefits are updated in line with earnings rather than inflation, 200,000 children will be pushed into poverty.

In April 2022, when inflation was running at 9 per cent, benefits were uprated by 3.1 per cent in line with inflation in September 2021. Since then, prices have risen even further and the CPAG estimates the average inflation rate over 2022/23 to be 10 per cent.

The prices of essentials like energy and food have risen most. As low-income families spend more on essentials as a proportion of their income, their costs have increased by 12 per cent in 2022/23 – four times more than the increase in benefits last April.

The additional cost of living support has helped to mitigate some of this pressure on family budgets (through the one-off payments to households on means-tested benefits, the energy bill support scheme and council tax relief).

CPAG: “The cost-of-living support aimed at helping families with inflation will end in April 2023. At this point, annual benefit uprating will take place. Last May, the then Chancellor committed to increasing benefits in 2023 in line with September 2022’s inflation rate, expected to be around 10 per cent. Honouring this commitment is the minimum that is needed. Given that lower-income families face high levels of inflation, even this will still leave them worse off than before. Families have already been pushed to breaking point by the £20 cut to universal credit last year. Benefits must increase by more than inflation to prevent additional hardship.”

The CPAG state that to protect families from the worst effects of inflation, the government must urgently take two steps:

  • Uprate all benefits by at least inflation – uprating by earnings will leave low-income families 10 per cent worse off than in 2020/21; uprating by inflation will leave then 5 per cent worse off. Uprating by 15 per cent would still only restore the value of benefits to their level after the £20 cut to universal credit.
  • Remove the benefit cap – capped households are some of the poorest across the country and will receive no additional support in April as the cap has been frozen since 2016. The benefit cap would only cost £500 million to remove – 0.2 per cent of total spending on social security.

Jon Cruddas MP: “I fully support the CPAG in their call on the government to uprate all benefits by at least inflation, and to remove the benefit cap. The country is facing the worst cost-of-living crisis ever seen and inflation has now soared past 9%- the highest it has been in 40 years- with no clear end in sight. The time to act is now.”