Housing: PM announces changes to Universal Credit rules
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A payment boost in line with average earnings would mean a real-terms cut for claimants, while a raise in line with inflation would be a significant boost, with inflation currently at 9.9 percent. Conservative MPs have been urging Prime Minister Liz Truss to maintain Boris Johnson’s promise to hike benefits in line with inflation.
If payments rise in line with average earnings, in real terms a single unemployed adult would lose £185, while a single disabled adult would lose £380 and a working couple with two children would lose £752, according to the Resolution Foundation.
Chancellor Kwasi Kwarteng has confirmed he will bring forward the statement to October 31, with the timescale later confirmed by a spokesman for Downing Street.
When asked about the issue, the Chancellor told the Commons: “No decisions have been made.
“There’s a natural, usual, statutory process that’s being undertaken and we will have more detail at the time of the medium term fiscal plan.”
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Tory former Cabinet Minister Julian Smith warned that the Government must not balance forthcoming tax cuts “on the back of the poorest people in our country”.
Responding, Treasury Minister Chris Philp said: “I think the objective of this Government is first of all to make sure that the economy is growing, that will help lift wages, create new jobs and it will create a sustainable tax base for our public services.
“But as we make these decisions…of course we’re going to balance considerations of fairness, the cost-of-living pressures people suffer along of course with the interests of taxpayers, who are working hard to pay tax as well.”
Tory Treasury Committee chairman Mel Stride urged Mr Kwarteng to make sure he had solid backing for his plans or there would be further turbulence.
The Chancellor agreed the Government should “canvass opinion widely” before the plan is made public.
Earlier this year, benefits payments increased by 3.3 percent, as this was the inflation rate for September 2021.
The inflation rate for August was 9.9 percent, while average earnings increased by just 5.2 percent that month.
Below is an outline of how much monthly Universal Credit payments would increase if payments go up by 10 percent in line with inflation – the rate of inflation may change between now and when the decision is made.
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- Single and under 25 – £291.84
- Single and over 25 – £368.41
- Living with partner and both under 25 – £458.10 for both of you
- Living with partner and both over 25 – £578.29 for both of you.
People on Universal Credit and other benefits are received a £650 cost of living payment, in two instalments.
The first £326 instalment has already been made, and the DWP has confirmed when the second £324 payment will arrive in claimants’ bank accounts:
- Universal Credit – Autumn 2022
- Income-based JSA – Autumn 2022
- Income-related ESA – Autumn 2022
- Income Support – Autumn 2022
- Pension Credit – Autumn 2022
- Tax credits – Winter 2022.
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