DWP benefits claimants have been issued a warning after a minister suggested benefit payments may not rise in line with inflation.
This comes after the UK Government announced that there will be tax cuts to the most wealthy.
Normally, benefits and pensions are automatically uprated each April in line with inflation, however, chief secretary to the Treasury, Chris Philp has admitted that this is now under consideration. The Consumer Prices Index (CPI) rose by 9.9 per cent in the 12 months to August 2022, down from 10.1 per cent in the month earlier.
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As a move aimed to reduce future Government borrowing during the economic turmoil, Mr Philp said that a commitment by former chancellor Rishi Sunak to uprate benefits in line with inflation was under consideration, after reports that different Government departments have been asked to draw up plans for efficiency savings.
Speaking to Sky News, he said: “Getting Britain’s economy growing is so important. Important to raise wages and important to pay the tax bills of the future."
Responding to reports that Cabinet ministers would be asked to draw up efficiency savings for their departments, Mr Philp told ITV’s Robert Peston: “We are going to look for efficiencies wherever we can find them.”
He added the objective of the exercise would be to make sure the Government stays within its existing three-year spending limits.
Philp said: “Those efficiency savings will firstly make sure we do stick to those spending limits. And secondly it will enable us, within those spending limits which we are going to stick to, to target things which are going to stimulate growth.”
Mr Philp told ITV said he would not commit to an expected uprating of benefits in line with inflation.
Pressed about the decision, Mr Philp went on: “I am not going to make policy commitments on live TV, it is going to be considered in the normal way, we will make a decision and it will be announced I am sure in the first instance to the House of Commons.”
The minister also defended the cut to the 45p rate of income tax, which is set to have most-benefit for high earners, claiming it was only “one-twentieth” of the “fiscal firepower” announced last Friday.
This comes after the Bank of England launched an emergency government bond-buying programme, on Wednesday September 28, to prevent borrowing costs from spiralling out of control and stave off a “material risk to UK financial stability”, leading banks around the UK to withdraw mortgage loans.
The Bank of England also announced it was stepping in to buy up to £65 billion worth of Government bonds – known as gilts – at an “urgent pace” after fears over the Government’s economic policies sent the pound tumbling and sparked a sell-off in the gilts market.
Speaking to Bauer Media, First Minister Nicola Sturgeon reacted to the tax cuts and the mini-budget, she said: "Not to invest in the overall health and wellbeing of the country, but to make a relatively small number of already rich people even richer – it’s morally indefensible. It’s morally abhorrent what the Chancellor outlined on Friday, but as we’re seeing in real time it is also fiscally reckless.
"It’s going to lead to higher interest rates, which will hit mortgage payers. It will hit people with other debt repayments. And it’s going to continue to fuel inflation, which makes the cost-of-living crisis worse.
"It is hard to exaggerate the damage that this UK Government is doing right now.
"The House of Commons, in my view, should be recalled immediately to get some order around this, before this Prime Minister and Chancellor do any more damage to the UK economy.”
She added: “I find it really impossible to get my head round the fact that we have a budget from the UK Government that everybody, apart from the most tribal Tory supporters, thinks was a serious mistake, morally repugnant and fiscally disastrous, but somehow the Scottish Government should just follow suit and make all the same mistakes.
"We will not do that. We will take decisions, carefully, that are about helping those who need it most, continuing to have a progressive tax system and continuing to take the kind of actions … that are about building an economy that is diverse, healthy and sustainable for the longer term.
"And the route to that is not cutting tax in a hefty way for the very wealthiest in society.
"So we’ll take careful, sensible decisions, and the fact that they’re sensible will put them in stark contrast to what we’ve seen from the Chancellor in recent days.”
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