Disability and working age benefits will be increased in line with inflation, the Chancellor has confirmed.
Such benefits will rise by 10.1% from April in line with the rate of inflation in September, at a cost of £11 billion, Jeremy Hunt said.
He also said he is concerned about a “sharp increase in economically inactive working age adults” since the start of the pandemic, announcing a review into the issues holding people back from work.
More than 600,000 people on universal credit will be asked to meet with a work coach “so that they can get the support they need to increase their hours”, he said.
Mr Hunt said there had been some arguments to uplift working age and disability benefits below the level of inflation, “given the financial constraints we face”, but that “would not be consistent with our commitment to protect the most vulnerable”.
The Chancellor said: “That is an expensive commitment, costing £11 billion, but it means 10 million working age families will see a much-needed increase next year, which speaks to our priorities as a Government and our priorities as a nation.
“On average, a family on universal credit will benefit next year by around £600, and to increase the number of households who can benefit from this decision I will also exceptionally increase the benefit cap with inflation next year.”
He also announced additional cost of living payments of £900 to households on means-tested benefits and £150 for individuals on disability benefit.
The Chancellor said he is proud to live in a country with “one of the most comprehensive safety nets anywhere in the world”, but expressed concern about a rise in working age adults out of employment.
The Prime Minister has commissioned a review, to be undertaken by the Work and Pensions Secretary, into factors holding people back, and the Government will invest an extra £280 million to crack down on benefit fraud and error over the next two years.
Meanwhile, the managed transition of people receiving employment and support allowance on to universal credit will be moved back to 2028, the Chancellor said.
Many groups expressed relief that benefits will rise in line with inflation, but they warned many vulnerable people will still fall through the cracks.
Rebecca McDonald, chief economist at the Joseph Rowntree Foundation, said: “It will be a huge relief to families on benefits that they are not facing what would have amounted to a historic cut.
“In taking this stand, the Government has acknowledged that people cannot withstand benefits being eroded any further.
“However families are facing the worst winter many will remember and can’t wait for April – they need the help now to get through a winter of soaring costs.”
Dame Clare Moriarty, chief executive of Citizens Advice, said: “Today’s announcement will go some way to help people on the lowest incomes stay afloat during this economic storm.
“Support with energy bills, extending the cost of living payments and uprating benefits with inflation will offer much-needed reassurance for some, but many will still fall through the cracks.”
Anastasia Berry, policy co-chair of the Disability Benefits Consortium, said the announcement will provide “much-needed reassurance” but she warned benefits were inadequate “long before” the cost-of-living crisis.
She said: “Disabled people face higher costs than the general population as they may need to power vital medical equipment or keep the heating on to maintain circulation.
“But with inflation at 11%, many disabled people are facing a long bleak winter, and help cannot wait. Right now, some are unable to afford food, heating and medication.
“The Government must bring this support package forward to help those who are already at breaking point.”
Shelter said the budget contains a “housing hole”, with housing benefit remaining frozen at 2020 levels while private rents are soaring.
Chief executive Polly Neate said: “Increasing universal credit will really help people struggling to pay their food and fuel bills, but crucially it doesn’t cover rents which are most people’s biggest outgoing.”
Save the Children UK said parents will be concerned over the fresh focus on worklessness, and noted that childcare costs – a significant barrier to employment – were not mentioned by the Chancellor.
Dan Paskins, director of UK Impact, said: “We can see the Government has made some attempts to ease the pain for families who have for too long been living in an inadequate social security system, drowning in debt and going without.
“But this needs to be the first step with lots more action to come, to turn rhetoric about compassion into action to make sure no child misses out because bills and food hollowed out family incomes.”
Melanie Wilkes, head of research at the Work Foundation at Lancaster University, said: “We’re concerned that Government is planning to put a greater number of people out of work under pressure to meet universal credit requirements.
“This approach ignores the deep challenges that many face in trying to find a job or stay in work and will be difficult to deliver without significant investment in our employment support services, which are already stretched and under pressure.”
