PENSIONS and benefits are expected to increase in line with inflation in a move that will cost Â£11billion in 2023-2024.
While the plan has yet to be confirmed, the Government hopes it will be seen as âfair and compassionateâ.
But the increases would mean deep cuts in public spending â and tax rises.
Tory MPs have raised concerns that increasing benefits in line with wages, rather than inflation, would see real-term cuts for millions and warned against balancing the books âon the backs of the poorestâ.
He said his priority will be shielding the poorest from crippling prices.
Ahead of the November 17 Autumn Statement Mr Hunt said: “While we canât completely protect people from rising prices, my priority at the upcoming Autumn Statement will be to protect the poorest in society as we take the tough decisions necessary to fix our public finances.”
A Treasury source said “no final decisions have been taken” and that benefits and pensions were still on the table.
This is because inflation has been higher than the other two indices in what’s known as the “triple lock”.
The triple lock was first introduced by the coalition government in 2010 and sees pension payments increase in line with whichever of the following is highest:
- Earnings â the average percentage growth in wages in Great Britain
- Prices â the rising cost of living in the UK, as measured by the Consumer Prices Index (CPI)
And raising pension payments by 10.1% next year would see millions of households Â£972 a year better off in 2023.
Universal Credit recipients would also see their payments rise by up to Â£637 a year in 2023 if payments rise with inflation.
How would this affect pension payments?
Your state pension amount depends on your National Insurance record.
Check your state pension forecast to find out how much you could get and when.
The full new state pension is Â£185.15 per week.
Youâll be able to claim the new state pension if youâre:
- a man born on or after 6 April 1951
- a woman born on or after 6 April 1953
The full basic state pension is Â£141.85 per week.
Youâre eligible for the basic state pension if you were born before:
- 6 April 1951 if youâre a man
- 6 April 1953 if youâre a woman
It means pensioners would get a total of Â£10,600 a year – a Â£972.40 increase – when new rates roll out in April next year.
While the basic state pension would up Â£14.35 from Â£141.85 per week to Â£156.20.
Over the year, that would be an increase of Â£746.20 to Â£8,122.40 in total.
But whether or not the government decides to keep the popular triple lock policy in place is resting on a knife edge, as Liz Truss re-evaluates her money policy promises in a battle to save her career.
Instead, the government could choose to use the average percentage growth in wages in Great Britain to calculate rate rises.
If this is the case, and the government uses the earnings growth figures for the three months to July – which is 5.5% – then the maximum new state pension would rise from the current rate of Â£185.15 to Â£195.35.
That would mean pensioners would get Â£8.50 less a week, which over the year, totals Â£442 less than what they would get in the case of an inflation-linked increase.
While the basic state pension would rise from Â£141.85 to Â£149.65 per week, which is Â£6.55 a week less – or Â£340.60 a year less – than an inflation-linked boost.
How would this affect Universal Credit and benefit payments?
The following nine benefits are legally required to have their payments rise with the previous September’s rate of inflation each April:
- Personal independence payment (PIP)
- Disability living allowance
- Attendance allowance
- Incapacity benefit
- Severe disablement allowance
- Industrial injuries benefit
- Carer’s allowance
- Additional state pension
- Guardian’s allowance
Each of the above benefits are expected to rise by 10.1% from April 2023, though the government has yet to confirm that.
We’ve listed an example of how much you can expect payments will rise next year based on inflation of 10.1%.
People with long-term health conditions or disabilities can get extra help from a benefit known as personal independent payment (PIP).
PIP is made up of two parts and whether you get one or both of these depend on how severely your condition affects you.
You may get the mobility part of PIP if you need help going out or moving around. The weekly rate for this is either Â£24.45 or Â£64.50.
While on the daily living part of PIP, the weekly rate is either Â£61.85 or Â£92.40 – and you could get both elements, so up to Â£156.90 in total.
If you get the maximum amount, you can expect your payments to rise from Â£156.90 a week to Â£172.75 a week from April 2023 – up by Â£15.85 a week.
The following 10 benefits could rise by wages instead of inflation.
But the government has not yet confirmed how much payments will rise yet, and they could still go up by the higher amount.
- Universal Credit
- Child benefit
- Contributory employment and support allowance
- Contributory jobseeker’s allowance
- Statutory maternity/paternity pay and maternity allowance
- Income-based jobseeker’s allowance (JSA)
- Income-related employment and support allowance (ESA)
- Income support
- Working tax credit
- Child tax credit
Almost five million people claim Universal Credit, which was first introduced in 2013.
Under the system, you receive different amounts depending on your circumstances:
- If you’re single and under 25 – Â£265.31
- If you’re single and 25 or over – Â£334.91
- If you live with your partner and you’re both under 25 – Â£416.45 (for you both)
- If you live with your partner and either of you are 25 or over Â£525.72 (for you both)
If you live with your partner and you’re both under 25 you’ll currently be getting Â£416.45 between you a month.
If your Universal Credit were to rise in line with inflation at 10.1%, your payment would go up by Â£41.64 to Â£458.51.
If it were to rise in line with wages at 5.5%, your payment would go up by Â£25.19 to Â£441.64. That’s over Â£15 less per month.
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