Gains from the cut in national insurance (NI) for low-income families could be dwarfed by inflation if the Government decides to raise benefits in line with wages rather than inflation. According to research from Child Poverty Action Group and Action for Children, a family with two children earning less than £24,700 will lose out by more than £600 in 2023/24 if benefits are increased in line with earnings.
This is because earnings have increased by 5.5%, while last month’s Consumer Price Index (CPI) inflation rate is expected to be between 10-10.1% when it is announced on Wednesday. If the Government decides to uprate benefits by inflation, then it will be increased by between 10-10.1%, coming into effect from next April.
According to figures from the group, a teaching assistant with average earnings of £17,789 will gain just £65 from the NI cut, but their two-child family will lose £752 if their benefits do not rise in line with inflation. Among the professions that would be hit hardest by a failure to raise benefits in line with inflation include care workers, hospital porters, postal workers, and street cleaners.
The group assumed that inflation will be 10.1% in its calculations. Chief executive of Child Poverty Action Group Alison Garnham said that many more families will be “pushed to the brink of survival” unless they receive support.
“The UK is already trapped in a child poverty crisis – and many more families will be pushed to the brink of survival without support,” she said. The bare minimum Government can do is to confirm it will raise benefits in line with inflation.
“With so much uncertainty and fear, families are terrified, and it’s unthinkable that children will be forced to bear the brunt of the Government’s economic mistakes. Director of policy and campaigns at Action for Children, Imran Hussain, added: “Protecting children from hunger and harm is not an eye-wateringly hard decision.
“A cut in the true value of benefits would cause immense long-term damage to so many of the low-income parents and children we support who are already struggling to survive on the breadline.”
The Government did not say, when asked, when its decision about how it will calculate the increase in benefits will be announced.
Former chancellor Kwasi Kwarteng previously said it would be announced during his medium-term fiscal plan on October 31 – but neither the Treasury nor the Department for Work and Pensions was able to confirm if the new Chancellor Jeremy Hunt will stick to this arrangement.
