In recent weeks, the Prime Minister has declined to commit to increasing benefits in line with inflation, despite mounting pressure from a cabinet minister and senior Conservative MPs to do so in light of the rising cost of living.
According to a minister at the department of labor and pensions, Liz Truss is anticipated to decide in November whether to increase payments in line with inflation.
Victoria Prentis stated that “no decision has been made about the increase of benefits,” but she is certain that the government will “make that decision as soon as feasible.”
According to a source from Downing Street, the prime minister can see both sides of the discussion and is “genuinely undecided” on the issue.
The source stated that before taking a position, Ms. Truss will “listen to cabinet and colleagues.”
Ms. Prentis told that a late November decision would allow Work and Pensions Secretary Chloe Smith to review the latest numbers on earnings, coming tomorrow, and inflation, due later this month.
“She can do nothing until those numbers arrive. Ms. Prentis stated, “She will next examine how, if at all, to increase benefits and what number to use.”
“She has broad discretion to act in this manner. Typically, we make a decision and communicate by the end of November.
“Following the passage of a piece of legislation in the House of Commons, which occurs annually in January, benefits will be increased or decreased by the chosen manner in April.”
In recent weeks, the Prime Minister has declined to commit to increasing benefits in line with inflation, despite mounting pressure from a cabinet minister and senior Conservative MPs to do so in light of the rising cost of living.
What the Prime Minister and other ministers have stated.
The prime minister told broadcasters in Birmingham, where the Conservative Party had its conference last week, that she had “not taken a judgment” on whether or not to honor the increase in benefits promised by her predecessor Boris Johnson.
Ms. Truss added, “It’s very apparent that we must assist the most vulnerable as we head into this winter.”
Last week, House of Commons Leader Penny Mordaunt became the first cabinet minister to explicitly criticize not increasing benefits with inflation. She told Times Radio, “I’ve always advocated – whether it’s pensions or our welfare system – maintaining pace with inflation. It is rational to do so. This is what I voted for previously.”
On Monday, a top Conservative lawmaker, Damian Green, told that the government should raise taxes by inflation. The previous administration promised to do so, thus the public anticipates this.”
Additionally, former transport secretary Grant Shapps has increased the pressure. When asked if he would like to see benefits adjusted for inflation, he responded, “Of course, every politician would want to see that.”
Each percentage point increase in benefits adds £1.6 billion to the cost of welfare
In addition, former chancellor Sajid Javid stated that: “I believe benefits must remain in step with inflation.”
Downing Street is rumored to be considering boosting Universal Credit using a lesser criterion, such as the increase in average earnings, as opposed to inflation.
Benefits are typically indexed to the consumer price index (CPI) inflation rate beginning in September, with the increase taking effect the following April.
The Institute for Fiscal Studies predicts that for every percentage point increase in the CPI, welfare spending increases by £1.6 billion.
Former work and pensions secretary Sir Iain Duncan Smith’s former welfare adviser Baroness Stroud, who now works for the Legatum Institute, has warned that failure to increase benefits in line with inflation will push 450,000 people into poverty next year.
While Ms. Truss has not excluded benefit reductions in real terms, she has stated that she is “totally committed” to indexing pension increases to inflation.
The dispute over benefits arose after the government abruptly abandoned its intentions to eliminate the 45% tax rate on earnings over £150,000 earlier this month in response to significant criticism, notably from Conservative lawmakers.
Last week, Ms. Truss defended the U-turn by stating that the government “listens” and that the tax cut “wasn’t a central aspect” of the development plan.
