A Treasury minister has pledged people in receipt of benefits from Department of Work and Pensions (DWP) will see a rise next year.
People who receive government support were hit when the government suspended the triple lock increase this year. Pension rises are normally based on a triple lock that sees them go up by whichever is the highest of inflation, average wage increases or 2.5%.
However, the jump in wages at the end of furlough would have led to increase of 8.8%. The DWP revealed the rate will instead rise by 3.1% next month in line with the Consumer Price Index.
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The UK has also been rocked by a cost-of-living crisis as the Office for National Statistics announced the rate of Consumer Price Index Inflation increased to 6.2% in February. This is expected to rise further as the Bank of England warned that inflation might even hit double figures of 10% or more later this year if the energy price cap goes up again in October - as Birmingham Live reports.
However, the benefit rates are based on inflation and Treasury minister Simon Clarke said surging rates will be reflected in the updated figures for April 2023.
Mr Clarke, opening the debate on the National Insurance Contributions (Increase of Thresholds) Bill, told the Commons: "We have to consider all our decisions in the context of both wider affordability and also how the system operates. The welfare system always operates on the basis of an uprating in September for changes in the ensuing April.
"If there is high inflation, as is forecast, during the course of 2022 that will be reflected in the uprating figures for April 2023 and the triple lock will be in place to protect families."
He later confirmed: "Insofar as the forecasts of very high inflation for this year do indeed come to pass that will be captured in the uprating figures that will be delivered this autumn for 2023 benefit uprating."
The Bill implements a policy announced by Chancellor Rishi Sunak in his spring statement to raise the threshold at which people pay national insurance. NI thresholds where it starts to be applied will rise from £9,880 to £12,570 from July, aligning income tax and NI in a tax cut worth more than £6 billion, according to the Treasury.
The Government believes it will benefit almost 30 million UK workers and save the typical employee more than £330 in the year from July. Labour's Stephen Timms, who chairs the Work and Pensions Committee, highlighted concerns that Universal Credit claimants will lose 55 per cent of the £330 tax cut "due to a reduced Universal Credit award".
Shadow Treasury minister James Murray said the Bill has more to do with the Chancellor wanting to portray himself as a hero who cuts taxes.
He said: "We will support today's Bill as any help for people facing the Chancellor's national insurance tax hike in April is something we welcome. There are benefits to raising the threshold at which people begin to pay national insurance.
"But we should be conscious that this Bill has more to do with the Chancellor's increasingly desperate desire to paint himself as a tax cutter than it does with a well thought through package of measures to help people with the struggles they face. Even after this Bill passes, the truth is the tax burden in our country will still be at its highest in 70 years.
"We are still the only G7 country to be raising taxes on working people this year."
Labour's former shadow chancellor John McDonnell said action was also needed on wages, warning: "Unless we inflation-proof wages, I'll predict now we will see flaring up industrial strife within our country."
Mr McDonnell gave the example of council workers and their below-inflation wage settlement.
He said: "What we should be doing, and I just invite the Government to consider the issue with regards to wages in the public sector because they obviously set the terms of the private sector as well, that unless we inflation-proof wage settlements what we'll find is often the lowest paid workers will be hit hard by the erosion of their wage standing as a result of inflation."
The Bill received an unopposed third reading and will undergo further scrutiny in the Lords at a later date.
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