INCREASING BENEFITS: High inflation ‘soon to be reflected’ in benefits, says Treasury Secretary

Benefits will soon be inflation-linked to help poorer Britons amid a price crisis, the finance minister said.

An increase in additional benefits will soon be linked to rising inflation, and the triple lockdown will also “go into effect” for pensions.

Simon Clarke told MPs that high inflation would “reflect” in the ratings upgrade for April 2023 if current projections come true.

The Honorable Simon Clark Mp - Gov.uk

The government will raise benefits by 3.1% this April, although inflation is expected to average nearly 8% during the year.

The triple lockdown ensures pensions rise whichever is higher: income, inflation, or 2.5%, but the income element has been put on hold for 2022/23 due to fears of unaffordable growth caused by the impact of the coronavirus crisis on wages. .

Mr Clarke told the House of Commons: “The UK spends £243bn a year on our broader welfare spending, including pensions. It’s a country where we do a huge amount of things to make sure everyone gets support.”

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“We need to consider all of our decisions in the context of both wider availability and how the system works. The social security system always works on the basis of a raise in September for changes next April.

“If there is high inflation throughout 2022, as projected, this will be reflected in the April 2023 boost figures and a triple lockdown will be put in place to protect families.”

He later confirmed: “As the forecasts for very high inflation for this year are indeed coming true, this will be reflected in the boost figures that will be presented this fall to raise benefits for 2023.”

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).

Starting thresholds for NI will rise from £9,880 to £12,570 from July, equalizing income tax and NI on more than £6 billion in tax cuts, according to the Treasury.

The government believes this will benefit nearly 30 million UK workers and save the average worker over £330 a year starting in July.

It was previously announced that a 1.25 percentage point increase in NI contributions will be introduced across the UK from April 6, with funds raised for health and welfare purposes.

Stephen Timms of the Labor Party, who chairs the Works and Pensions Committee, expressed concern that universal credit applicants would lose 55% of the £330 tax credit “due to the reduced universal credit reward”.

Mr. Clarke said he would look into the matter, but he didn’t have the figures handy.

For Labor, Shadow Treasury Secretary James Murray said the bill had more to do with the chancellor’s “increasingly desperate” desire to portray himself as a tax collector than helping people with the hardships they face.

He said: “We will support today’s bill as we welcome any help for people facing the chancellor’s National Insurance tax hike in April. There are benefits to raising the threshold at which people start paying National Insurance.

“But we must be aware that this bill has more to do with the chancellor’s increasingly desperate desire to pose as a tax collector than a well-thought-out package of measures designed to help people cope with the difficulties they face. The truth is that even after this bill is passed, our country’s tax burden will still be the highest it has been in 70 years.

“We are still the only G7 country to raise taxes on workers this year.”

Mr Murray noted that “the truth is that the Chancellor realized that his increase in National Insurance in April was wrong.”

Former Labor Shadow Chancellor John McDonnell said action was needed on wages as well, warning: “If we don’t deliver inflationary wages, I predict we’re about to see an outbreak of industrial strife within our country.”

Mr. McDonnell cited the example of municipal workers and how they are paid less than inflation.

He said: “What should we do and I’m just suggesting that the government look at public sector wages because they obviously set conditions for the private sector as well, what if we don’t provide inflation-protected payroll that we will find that often the lowest paid workers suffer greatly from the reduction in their wages as a result of inflation.

More to come.

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