Benefits increases in the autumn statement are still a real-terms cut

Jeremy Hunt announcing benefits changes and the DWP logo

Chancellor Jeremy Hunt announced on Thursday 17 November that benefits will rise in line with inflation in April 2023. This includes the controversial benefit cap. While this may seem like a welcome move from the government, in reality it’s not as good as it seems. This is because people on benefits will still be no better off than in April 2021 – if not worse.

Hunt’s autumn statement: what’s going on with benefits?

As Martin Lewis’s Money Saving Expert reported:

From April 2023, inflation-linked benefits will increase by 10.1%, directly in line with September’s CPI measure of inflation.This means, for example:

If you’re a single person over 25 currently claiming universal credit, you’ll get an extra £33.83 a month, as your monthly allowance will rise from £334.91 a month to £368.74 a month.

Commenting on Hunt’s announcement, the Joseph Rowntree Foundation (JRF) said:

Even with uprating, rates are at historic lows and households facing difficult times are increasingly not able to cover the essentials.

As the Canary previously reported, the cost of living is out of control – and it’s hitting the poorest people the hardest. For example, in October the cost of pasta had gone up by 34% compared to a year earlier, and electricity and gas had gone up by a staggering 88.9%.

Read on...

Taking benefits back two years

It sounds great on paper that the government is increasing benefits by 10.1% in April 2023. However, this comes after years of cuts. As the Canary reported in March, in the financial year 2022/23, think tank the Resolution Foundation said the government was effectively cutting £10bn in real terms from people’s benefits. This was because the increase in the rate in April was only 3.1%. The Resolution Foundation based this on a peak inflation rate this year of 7.6%. We now know that has been dwarfed – with inflation hitting 11.1% in October.

The Resolution Foundation said that for 2023/24, if benefits went up again by inflation, then based on its calculation the real-terms value of them would return to April 2021 levels. The point being, this is what has now happened – albeit at a higher rate than what the Resolution Foundation forecast, but with higher inflation to boot.

So actually, all Hunt is done is taken the value of people’s benefits back to the level of April 2021 – if that. People who are reliant on them will not see any major improvement in their finances – life will just be slightly less terrible than it could have been.

Token gestures

Money Saving Expert also reported that:

The overall benefits cap (the maximum amount you can get in benefits) will also rise with inflation from £384.62 a week to £423.45 a week if you’re in a couple and or a single parent, and from £257.69 a week to £283.72 if you’re a single adult.

That’s an increase of £38.83 for people with children. Again, this means little in the real world. As the Canary previously reported, successive governments have kept the benefit cap the same for years – meaning that it has effectively cut the benefits of people affected (outside of London) by £260 a week. Thirty-eight quid in no way makes up for this.

The Office for Budget Responsibility (OBR) said that even with the autumn statement, the UK is facing the worst fall in living standards on record. So, Hunt’s increase to benefits is not really much of an increase at all. There are still numbers to be crunched – but it’s immediately clear that actually, the government’s autumn statement has merely been a little less cruel for the poorest people than it could have been.

Featured image via the Telegraph – YouTube screenshot and Wikimedia Commons/UK Government 

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  • Show Comments
    1. As a disabled person, who is totally reliant on Disability Benefits, I’ve experienced the worst of this cutting back on the Benefits System, that each government has deliberately worked on, towards what they continue to refer to, as the Benefits Bill.

      My standard of living, not great in the first place, has been gradually worsening since, first, New Labour got into government, and then through this last decade, and more, of successive Tory Governance, that has escalated this continued drop in living standards, for all of us reliant on a disappearing State.

      Since this latest set of Tory governments took power, our standard of living has only worsened exponentially!

      Nobody should have to try and exist on the amounts that this government deems ‘a living wage’. This goes for the so-called National Living Wage, as well as Pensions, Disability Benefits and, especially, those ‘Benefits’ designed to ‘help and support’ those that have to claim In-Work Benefits, which are paid to those working families who are paid so poorly by their employers, that they have to claim Benefits, just to survive!

      As for those who are single, and are Unemployed, whether this is through the lack of jobs in their area, or for any of the many reasons that people end up having to rely on the State, to live, the levels of Benefits deemed suitable for them, wouldn’t keep a schoolchild alive, let alone someone who has to spend 35 hours a week actively seeking work, with all the expenses that this brings about!

      For too long, the working people of this country have been treated like the cheap labour that they have become, with the taxes they pay going to support even more of their bosses, as they pay ever smaler wages.

      The fact that it’s so often Tory Shareholders demanding ever bigger profits, at the expense of the workers wages, just makes this situation ever more untenable!

    2. We think The Canary is underreporting; the state calculate inflation using a measure that excludes the biggest expenditure for most people, namely housing costs. They measure it using unrepresentative items of expenditure for most people, esp. disabled people meaning official inflation drastically undermeasures our actual costs. The state is making disabled social security much harder to claim, with managed migration a shambles and people being put on lower rates of Universal Credit than they were on the ‘old style’ ESA and legacy benefits. And COVID is still looming making thousands of previously healthy people disabled and disabled people sicker or even killing us.

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