Insight

Government not yet decided if benefits will rise with inflation

Chris Philp said the government had not made up its mind on uprating. Credit: PA

The chief secretary to the Treasury has confirmed that the government has not yet decided if it will uprate benefits in line with inflation, despite a promise to do so by Rishi Sunak when he was chancellor. 

Chris Philp said I was accurate when I reported earlier that the matter was under consideration by both the Treasury and Department for Work and Pensions. 

The fact he admitted that ministers are still deciding is unusual because normally benefits and pensions are automatically uprated each April- at the rate of inflation the previous September. 

However, it was previously frozen by George Osborne during the austerity years. That was controversial this year because the rate in September 2021 was 3.5% - but had risen sharply by April - meaning critics argued the rise was unfair.

Afterwards, Sunak promised that next year would see benefits rise by the higher rate reached this autumn - now known to be 10%. 

Some in the sector tell me they fear the rise will be linked to earnings rather than prices, and that other benefits could also be affected.

That would be hugely controversial, not least because the cost of uprating would be £3bn per annum, not much more than the government is spending to remove the 45p rate of tax for people earning over £150,000. 

Although a decision is being made on benefits, a source confirmed that pensions would be protected whatever the outcome, because Liz Truss promised during her campaign to maintain the triple lock for pensions.

It states that pensions will rise by the highest of three numbers - earnings growth, price inflation or 2.5%. 

Benefits are a possible target because Truss has promised to protect spending in health, social care and education and increase it in defence. 

Philp told ITV News' Political Editor Robert Peston on his political programme that the matter was "under consideration" and a decision would be made in the coming weeks. 


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