Low-income households are struggling as the cost of living payment comes to an end. Image: Pexels
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The government could U-turn on its promise to raise benefits in line with inflation next year in a move experts warn would be a “devastating blow” for low-income households.
Former chancellor Rishi Sunak pledged to increase universal credit and other benefits in line with inflation from April. With the current rate of inflation around 10 per cent, it would have meant a double digit increase in benefits – a lifeline to low-income families struggling with the escalating cost of living.
But current treasury minister Chris Philip has now said the government may not go ahead with the planned increase. Campaigners have responded by warning that would “cause fear for millions who have spent the past months struggling to feed their families”.
Speaking to ITV’s Robert Peston, Philip said: “I am not going to make policy commitments on live TV. It is going to be considered in the normal way. We will make a decision and it will be announced I am sure in the first instance to the House of Commons.”
Iain Porter, senior policy adviser at the Joseph Rowntree Foundation, said it is “shocking” the government is suggesting a U-turn on Sunak’s promise. He added: “This will mean yet another devastating blow to the finances of people on the lowest incomes and will cause fear for millions who have spent the past months struggling to feed their families, cook hot food and heat their homes.”
Liz Truss and Kwasi Kwarteng have announced tax cuts in a bid to boost economic growth. But Porter said the plans are “morally indefensible” and will be “funded on the backs of the poorest in our society”.
He said: “Truss must act now to reassure people on the lowest incomes in our society that she understands what they are going through and confirm they will not receive a real-terms cut to the support they receive at a time when they are already facing a desperate struggle to get by.”
James Taylor, director of strategy at disability equality charity Scope, said: “It would be devastating and lead to disabled people starving and freezing in their own homes. Disabled people and their families are the ones in our society who need financial support the most. But instead, the government has chosen to lower taxes for top earners.
“Many disabled people have no choice but to rely on benefits for income. They’ve seen real-terms cut after cut, firstly because of a four-year benefits freeze, and then last year’s failure to increase in line with inflation. Refusing to increase benefits in line with the true inflation rate would show an utter disdain towards people who need this support.”
Jeevun Sandher, head of economics at the New Economics Foundation, added: “We already face a hunger crisis in this country. Cutting social security payments would make that even worse – over 2.6 million children are already going hungry.”
Experts also claim it could have a detrimental impact on the mental health of people who are struggling. Vicki Nash, of charity Mind, said: “Any move by the UK government to inflict a brutal cut in practice to the incomes of people who receive benefits during the worst cost of living crisis in a generation would simply be cruel.
“It would plunge thousands of people, many of whom have mental health problems, into financial chaos. Instead of rowing back on a promise to provide people with the income they need to get by, the UK government should be bringing forward the benefits increase right now. People who receive benefits need, at the very least, enough to live on – it’s as simple as that. When the cost of living rises, benefits must too.”
Neil Cowan, of the Poverty Alliance, agreed and called the possible U-turn a “shameful moral failure and a disgraceful failure of compassion”. He said: “A real-terms cut in the incomes of people already being pulled into poverty at a time of crisis would be a sign of utter contempt. It doesn’t have to be like this. We can strengthen our social security and boost wages, so that everyone has the incomes they need to live in dignity and security.”
Emma Revie, chief executive at the Trussell Trust, said the charity is “extremely concerned” by the possible U-turn. She said food banks are providing 50 per cent more parcels to people in recent months than in the same period before the pandemic. That means an emergency food parcel is provided to someone facing hardship every 13 seconds.
“It is crucial that social security payments rise with inflation to help people afford food and other essentials and to prevent people needing to use food banks,” she said.
Michael Clarke, head of information programmes at Turn2us, added: “It is essential that the government keeps its promise to raise benefits to match inflation this April or else many more families will be tipped into financial crisis. We call on the government to re-evaluate its priorities, support those of us on the lowest incomes, and uprate benefits to stop even more families being pushed deeper into poverty.”
Campaign group Enough is Enough is also calling on the government to increase benefits, with demonstrations set to take place across the country on Saturday as the group demand urgent action.
Commenting on the possible real-terms cut, Enough is Enough spokesperson Dave Ward said: “More bonuses for bankers and more poverty for the vulnerable – what a statement of Liz Truss’s values. This government is nothing but a sick joke, and every citizen should be getting out onto the streets and the picket lines to play their role in chucking these zealots out of power.”
This Christmas, 3.8 million people across the UK will be facing extreme poverty. Thousands of those struggling will turn to selling the Big Issue as a vital source of income - they need your support to earn and lift themselves out of poverty.
