The Department for Work and Pensions (DWP) will be increasing benefits by 10.1% in April. These include payments like Universal Credit. However, there’s a major problem. In fact, people’s money won’t really be going up enough to cover the cost of rising prices. So, people reliant on benefits are going to be worse off than before the coronavirus (Covid-19) pandemic.
On Universal Credit? Here come the cuts
Think tank the Institute for Fiscal Studies (IFS) has crunched some numbers. It’s worked out how much April’s benefits increase is actually worth when you factor in price rises (inflation). This is called “real terms”. The chaos with inflation has hit the poorest people the hardest:
The IFS says that benefit claimants won’t actually be seeing an increase in April, overall. In reality, the DWP will be taking people’s benefits back up to the rate they were at in April 2022.
That is, if you’re on Universal Credit, your money will only be worth what it was a year ago. This is because everything is now more expensive. Moreover, you’ll still be worse off than before the pandemic. Look at the difference between “2019Q2” and “2023Q2” in the graph below:
Crucially, the IFS says DWP benefits rates won’t get back to pre-pandemic levels until April 2025. So, claimants will constantly be worse off until then. Meanwhile, the government is handing out more cost of living payments this year. It’s starting with £301 to some families this spring.
However, the IFS says that for some people, these payments do not make up for benefits not rising in line with inflation. This includes families with three or more kids and some disabled people. So, in short, these families’ £301 payments aren’t actually worth £301.
Sadly, this was all very predictable.
DWP: benefits are not worth the paper they’re written on
As the Canary wrote in November 2022 when the government announced its benefits increases, another think tank – the Resolution Foundation – warned that people would still be worse off. However, it actually underestimated the scale of the problem. It said people’s money in April 2023 would worth what it was in April 2021, back before inflation was out of control. So, the situation is now worse than that. Couple the DWP’s below inflation rise in April with its increased crackdown on non-working claimants, and you have a perfect storm of willful neglect from the department – and misery for people at the bottom of society.
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