A senior Conservative has called on his party to ensure welfare claimants are not handed a real-terms cut next year, after Rishi Sunak refused to commit to increasing benefits in line with inflation.
Andy Street, the West Midlands mayor and the most senior Tory outside London, said the party’s previous commitment to increasing benefits such as universal credit in line with inflation had become a “real symbol” of the party’s commitment to helping the low-paid.
Concerns over the policy have emerged since it was claimed that the chancellor, Jeremy Hunt, was considering a below-inflation increase in benefits as he struggles with tight public finances and Tory demands for tax cuts before the next general election. Sunak then refused to rule out a below-inflation rise during his recent trip to India.
Benefits are usually increased every April in line with the inflation rate from the previous September. That would mean an increase of about 7%. With inflation expected to be much lower in the spring, Hunt could then argue that a 7% rise would be too high.
Street, who has emerged as a leading voice on the party’s liberal wing, called on Hunt and Sunak to increase benefits in line with inflation, as they did this year.
“I don’t think the prime minister vacillated on it for one second,” said Street. “It seemed very clear, the decision to upgrade it by inflation was really important. And we will face that decision again, and I’m absolutely clear – that has to happen again, because that’s a real symbol.
“There is absolutely no question that there is a big chunk of people in this city [Birmingham] who are really hurting with the cost of living crisis at the moment, I’m not questioning that in any way. All of the national issues play out here, probably even more pronounced, from fuel poverty to declining real wages.”
The Department for Work and Pensions has previously said the government has increased benefits by more than 10% this year “to protect the most vulnerable from the impact of high inflation”. Hunt is likely to announce his decision over the uprating of benefits in the autumn statement, which he is due to give on 23 November.
It comes as analysis suggests that the government is far off course to halve UK poverty by 2030, a commitment it made as part of the UN’s sustainable development goals in 2015. The foreign secretary, James Cleverly, will discuss the goals at a summit this week.
Research by Adam Corlett, the principal economist at the Resolution Foundation thinktank, found that absolute poverty declined between 2015-16 and 2020-21, from 20% to 17%. Poverty has since been edging upwards as a result of the energy price shock, the removal of temporary pandemic support, ongoing welfare cuts, rising housing costs and the overall weak economic conditions. Absolute poverty is projected by Corlett to be higher in 2029-30 than in 2020-21. The poverty rate for children is currently projected to increase slightly from 27% to 28% of children.
“Changes in economic forecasts for the second half of this decade could easily alter this long-term, uncertain outlook; as could major policy changes,” said Corlett.
“But at present, the UK is nowhere near on track to meet its poverty reduction commitment, or even put in a creditable performance, and with each passing year the speed of change that would be required to meet the target increases.”
