Poorest families would lose £400 a year under Liz Truss benefits plan

A volunteer at a food bank unpacks donations for distribution to those in need. Photograph: Peter Summers/Getty Images

Low-income households will be almost £400 a year worse off under No 10’s plans to increase benefits at a lower rate than inflation, new analysis for the Observer has revealed.

Liz Truss and her government are considering uprating welfare in line with earnings rather than inflation. It would mean increasing them by 5.5% rather than about 10%, according to the most recent official data, saving about £5bn.