Benefit levels in the UK: MPs call for annual uprating guarantee

Committee calls for cost of living benchmark

The UK Government must outline the extent to which benefits should be supporting people with daily living costs and bring forward a plan so that benefit levels meet the new benchmark, a House of Commons committee said yesterday.

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• Inquiry: Benefit levels in the UK
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The Work and Pensions Committee’s report on benefit levels in the UK also calls on the Government to introduce a new ‘uprating guarantee,’ to uprate working-age benefits and the Local Housing Allowance rate each year, to end the uncertainty faced  by people claiming benefits.

The Committee also recommends that the Household Support Fund, which enables local authorities to help those in need, be made a permanent part of the social security system.

The recommendations follow a year-long inquiry launched after the Committee’s recommendation in its 2022 cost of living report to review the adequacy of benefits levels. The 2022 report highlighted evidence that a root cause of the financial challenges faced by households “lay in the fundamental inadequacy of social security support”, but the Government insisted that there was no objective way of deciding what benefits should be.

In response to that challenge, Thursday’s report says that the Government should develop a framework of principles and set a benchmark and objectives linked to living costs to measure the effectiveness of benefit levels.

If DWP finds that it is not meeting these objectives, it should set out how it intends to reach them, for example by increasing benefit levels when the financial situation allows.

The report also says that the Government should make an ‘uprating guarantee’ to increase benefits annually, based on, for example, prices. It would be required to set out its reasoning to Parliament if it decided to deviate from this guarantee.

On the Household Support Fund, the Committee welcomes the extension announced in Spring Budget 2024. The report says that it should become a permanent feature of the social security system to improve the ability of local authorities to plan their provision of discretionary support to households.

Rt Hon Sir Stephen Timms MP, Chair of the Work and Pensions Committee, said: “It is right that our benefit system incentivises work, but it should also provide an effective safety net for jobseekers, people on low incomes, carers and those with disabilities.  

“We have heard plenty of evidence that benefits are currently at a level that leaves many unable to afford daily essentials or meet the unavoidable extra costs associated with having a health impairment or disability.

“The Government has previously said that it is not possible to come up with an objective way of deciding what benefits should be.  Our recommendations are a response to that challenge, and the ball is now back in the Government’s court.

“On top of acknowledging and acting on a new benchmark and objectives linked to living costs, Ministers should commit to consistent uprating of benefits each year.  It is time to end the annual ‘will they or won’t they’ speculation and all the worry that brings to those who rely on the social security system for financial support.

“The Household Support Fund has provided a vital layer of additional support for households during the cost of living crisis.

“The Government should build on the extension announced in the Budget, and make it a permanent part of the social security system to allow councils to continue to reach those in their local areas who most need help.”

A full list of the Committee’s conclusions and recommendations is available on P74 of the report. The Report is also available in British Sign Language, audio and EasyRead formats.