People claiming benefits from the Department for Work and Pensions are set to see their payments rise next year as the cost of living crisis continues to worsen.
Household fuel and energy bills are set to soar when the new price cap comes into effect on April 1.
Inflation is also expected to continue to surge, while support from the UK Government will rise by just 3.1% in April, as reported by Nottinghamshire Live.
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In addition, the Office for Budget Responsibility has suggested that the Consumer Price Index could rise to a 40-year high of 8.7% in the final quarter of 2022 — this is primarily due to Russia's invasion of Ukraine and energy costs.
As a result, millions of households across the UK will struggle financially throughout the remainder of the year, though things may look up in 2023 as UK Government payouts are based on inflation.
For the 2022/2023 financial year, all benefits are rising by 3.1% in line with a decision to increase the State Pension by that amount.
Pension increases are ordinarily based on a triple lock — which sees them rise by whichever is highest out of inflation, average wage increases, or 2.5%.
However, with the jump in wages at the end of furlough, this would have been the deciding factor and resulted in pensions shooting up by 8%.
Therefore, the DWP revealed last September that it would discard the wages element and instead use the inflation figure — which at the time was 3.1%.
Work and Pensions Secretary Therese Coffey has promised that the triple lock will be reinstated the following financial year, and with inflation soaring, payments could increase by as much as 8% to 10% in 2023/2024.
If an 8% increase is applied, pensions will rise by £770 over the year, with all other benefits seeing the same increase.
This was confirmed by Treasury minister Simon Clarke, who stated to MPs that high inflation "will be reflected" in the uprating figures for April 2023 if the current forecasts come to fruition.
Mr Clarke, opening the debate on the National Insurance Contributions (Increase of Thresholds) Bill, told the Commons: "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."
He later confirmed: "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."
The Bill incorporates a policy that was unveiled by Rishi Sunak in his spring statement to increase the threshold at which people are required to pay National Insurance, rising to £12,570.
According to the UK Government, the move will benefit nearly 30 million workers across the UK and save the average employee over £330 a year starting in July.
Labour's Stephen Timms, who chairs the Work and Pensions Committee, highlighted concerns that Universal Credit claimants will lose 55% of the £330 tax cut "due to a reduced Universal Credit award".
Shadow Treasury minister James Murray said the Bill has more to do with the Chancellor wanting to portray himself as a hero who cuts taxes.
He said: "We will support today's Bill as any help for people facing the Chancellor's National Insurance tax hike in April is something we welcome. There are benefits to raising the threshold at which people begin to pay national insurance.
"But we should be conscious that this Bill has more to do with the Chancellor's increasingly desperate desire to paint himself as a tax cutter than it does with a well thought through package of measures to help people with the struggles they face. Even after this Bill passes, the truth is the tax burden in our country will still be at its highest in 70 years."
Labour's former shadow chancellor John McDonnell said action was also needed on wages, warning: "Unless we inflation-proof wages, I'll predict now we will see flaring up industrial strife within our country."
Mr McDonnell gave the example of council workers and their below-inflation wage settlement.
He said: "What we should be doing, and I just invite the Government to consider the issue with regards to wages in the public sector because they obviously set the terms of the private sector as well, that unless we inflation-proof wage settlements what we'll find is often the lowest paid workers will be hit hard by the erosion of their wage standing as a result of inflation."
The Bill received an unopposed third reading and will undergo further scrutiny in the Lords at a later date.
The DWP's largest payout is the State Pension, with 12.5 million recipients. It's known as a contributory benefit, because the amount is based on a person's National Insurance contributions - other such benefits are New Style Jobseeker’s Allowance (JSA), New Style Employment Support Allowance (ESA) and Bereavement Support Payment.
Some benefits are means-tested, meaning they are based on a person's income and savings. The biggest of these is Universal Credit which has 5.6 million claimants according to the latest figures and is the second biggest DWP payout after State Pension. Around 40% of those on Universal Credit are working and claim the benefit to top up low wages.
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.
And then there are the disability benefits Personal Independence Payment (PIP) and Disability Living Allowance (DLA), both determined by a person's need for extra help to deal with long-term health issues and not based on their means or National Insurance contributions. Nearly 2.8 million people are on PIP and a further 1.3 million on DLA.
