Chancellor Jeremy Hunt has announced major rises to benefits, pensions and the minimum wage from next April. Mr Hunt was speaking in the House of Commons as he detailed the UK government's autumn statement.
Hunt said that working and disability benefits would rise in line with inflation from April next year. That will include a 10.1% increase in Universal Credit. He said this would mean an average rise to a family receiving Universal Credit would get an extra of £600 a year, and that 10 million working-age families would benefit. Mr Hunt said that the cost of the policy would be £11bn.
On the national living wage, Mr Hunt said he had accepted a recommendation to increase it by 9.7%, making the hourly rate £10.42 from April 2023 for everyone aged over 23 years old.
The Chancellor also said he will increase state pensions in line with inflation in April, announcing the “biggest ever cash increase in the state pension”. That will be another 10.1% increase. He said that it meant the government was sticking to its “triple lock” promise on the state pension which means that the state pension would rise in line with the highest of: the previous September's inflation figure, the average wage increase, or 2.5%. There will also be a 10.1% increase in Pension Credits.
The increases to pensions, universal credit and the national living wage were announced at the end of Mr Hunt's autumn statement in which he detailed major changes to tax and spending. The wealthiest will see the biggest increase to their tax with the threshold for paying the highest rate, 45%, falling to £125,000 a year from £150,000.
Over the next six years to 2028, the thresholds at which people start paying the lower rate of tax, 20%, and the higher rate of tax, 40%, will be frozen. This means that as wages rise more people will be brought into paying tax and people will pay tax on a higher proportion of their income.
Chancellor Jeremy Hunt has also announced a review of benefits such as Universal Credit to find out why people are not getting into work. The review will include 600,000 more people on benefits having to meet with a work coach.
The Government wants to get more people off benefits and into work.
Mr Hunt said the UK will “face into the storm” that he linked to global pressures, adding to MPs: “There may be a recession made in Russia but there is a recovery made in Britain – and we do so today with British resilience and British compassion.”
The national living wage is to increase to £10.42 an hour from next April, giving a pay boost to an estimated two million workers.
The Chancellor said the 9.7% rise for workers aged 23 and over was the biggest ever cash increase for the statutory rate.
The rise represents an increase of over £1,600 a year to the average earnings of a full-time worker, said the Government.
Rates will rise by 10.9% to £10.18 for people aged 21-22 and by 9.7% to £7.49 for 18 to 20-year-olds.
Those aged 16 and 17 will see the hourly rate increase by 9.7% to £5.28.
The Living Wage Foundation welcomed the announcement but said the living wage rates would still be lower than the voluntary so-called real living wage of £11.95 in London and £10.90 outside the capital.
Katherine Chapman, director of the Living Wage Foundation, said: “There are now over 11,000 employers, committed to always paying their staff, including contractors like cleaners and security guards, the real Living Wage.
“Living Wage Employers provide stability and certainty to the employees who will need it most ahead of a tough winter.
“This helps move us towards a high-wage, high-growth economy as employees earning a decent wage are likely to be more productive and able to spend in their local economies.”
