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