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Uprating benefits by wages not inflation will plunge thousands into poverty


Warning comes from Child Poverty Action Group

Two hundred thousand more children across the UK will be pushed into poverty if benefits are uprated by wages rather than inflation.

New analysis from Child Poverty Action Group (CPAG) finds that almost all these children will be in families where at least one parent is working.

CPAG’s research shows that the average increase in prices for 2023/24 compared to 2021/22 is 16% for all households, but the inflation rate for low-income families  - who must spend a much higher proportion of their income on ever more expensive essentials like energy and food - is 19%. 

If benefits only go up with earnings next year, as the prime minister has yet to rule out, they will have only risen by 9% (3.1% and 5.4%) since 2021/22. This means that low-income households will receive 10% less in social security in real terms than they did two years ago (and even less if the £20 universal credit uplift is taken into account). Most of these households are working households who will also lose out from earnings going up by less than inflation.

Households who are unable to work, due to caring for young children, disabilities or being in between jobs, would be pushed even deeper into poverty. The 10% cut would be the biggest two-year reduction in social security ever – at a time when families are in desperate need of more support.

The prime minister has so far refused to confirm that she will honour the former chancellor’s pledge to increase benefits to match inflation, which is currently running at 10 %. 

Commenting on the new CPAG analysis, John Dickie, director of CPAG in Scotland, said: “The UK government needs to reassure struggling parents now that their children are not on the list for so-called efficiency savings.  The damage to children’s health, education and wellbeing when they are plunged into poverty is devasting and lifelong.

The chancellor must honour the promise to uprate benefits in line with inflation.   U-turning on children’s futures cannot be an option.”

Dickie continued: “Here in Scotland the Scottish government’s investment in social security and imminent increase to the Scottish child payment stands in strong contrast to threatened UK policy. But here too ministers need to continue to do the right thing and ensure that Scottish benefits, including the soon-to-be £25 a week Scottish child payment, at the very least hold their real terms value next year.”



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