Families in Britain who are on benefits are set for a large rise in their payments in 2023 due to the increasing levels of inflation. Government support will only rise by 3.1 per cent next month as the inflation figure was calculated last September.
However, inflation has doubled according to latest figures to 6.2 per cent for February 2022 and is expected to increase even further during the course of the year. The Office for Budget Responsibility has indicated that the soaring energy prices and war in Ukraine could push the percentage to 8.7 for the final three months of 2022 - which is a 40-year high.
The Bank of England have warned that if the energy price cap does go up again in October as expected, inflation could hit 10 per cent or more. For families on lower income, these rises in inflation means less disposable income but there is a glimmer of hope for the next financial year.
With all benefits going up by 3.1 per cent, it was also decided that State Pension would rise by the same amount for the 2022/23 financial year. Pension rises are usually based on a 'triple lock', meaning they get a rise between whichever is highest between inflation, average wage increases or 2.5 per cent. However with wages jumping up at the end of furlough by eight per cent, the DWP announced it would dismiss the wage element and got with the inflation figure of 3.1 per cent.
Work and Pensions Secretary Therese Coffey has pledged that the 'triple lock' will be reinstated for 2023/24 and if the forecasts of at least eight per cent are correct at the time of the calculations, pensions could go up by at least £770 over the course of the year with all other benefits getting the same percentage increase. Treasury minister Simon Clarke also confirmed to MPs that high inflation "will be reflected" in the figures for April 2023.
Mr Clarke said in the Commons when opening the debate on the National Insurance Contributions (Increase of Thresholds) Bill: "The United Kingdom spends £243 billion a year on our wider welfare spend, including pensions. This is a country where we do do a huge amount to make sure that everyone is supported. 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. 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."
DWP's largest payout is the State Pension (12.5 million receipients) followed by claimants for Universal Credit (5.6 million people). Universal Credit is based on a person's income and savings, like many other benefits such as New Style Jobseeker's Allowance (JSA), New Style Employment Support Allowance (ESA) and Bereavement Support Payment.
Other means-tested benefits are income-based Jobseeker's Allowance, income-related Employment and Support Allowance, Income Support, Housing Benefit, Tax Credits (from HMRC) and Pension Credit. All these benefits are set to increase if inflation follows the forecast, with disability benefits such as Personal Independence Payment (PIP) and Disability Living Allowance (DLA) also included.
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