The Tory government is already considering a real-terms benefits cut in April 2024. It could hit people claiming things like Universal Credit. This is because the Department for Work and Pensions (DWP) is reportedly thinking about only increasing benefits next year in line with wage increases – not inflation. The news comes off the back of this year’s ‘increase’ also not being enough to cover the cost of rising prices.
DWP: another real-terms cut looming?
The Telegraph broke the story. It noted that:
Working age benefits could be cut in real terms as part of the Government’s drive to reduce public spending and fund tax cuts…
Whitehall sources have told The Telegraph that ministers are considering uprating benefits in line with earnings instead of inflation next year, in a move that could save £1 billion.
Health-related benefits like Personal Independence Payments (PIP) are excluded from this. However, what this means is that any DWP increase in benefits like Universal Credit next April won’t keep up with rising prices. Therefore, as the Telegraph notes, the department will be forcing a real-terms benefits cut on people. It said that:
inflation currently stands at 8.7 per cent with regular pay rising by 7.2 per cent.
Currently, the government is pushing the idea that rising wages are causing inflation to stay high. Health secretary Steve Barclay said as much recently as a reason not to meet NHS junior doctors’ demands of a 35% pay increase. The capitalist International Monetary Fund (IMF) has agreed. So, on this basis, the Tories will be aiming to see reduced wage growth for the rest of the year.
Some forecasts put inflation at 5% by the end of 2023. If the government gets its way, this means pay will be rising by less than 5% – so benefits will go up by whatever amount that is. This will be disastrous for millions of families.
Universal Credit consistently lower
April 2023’s DWP benefits increase wasn’t really an increase at all. As the Canary previously reported, all the department did was take things like Universal Credit back to the value they were in April 2022:
That is, if you’re on Universal Credit, your money will only be worth what it was a year ago. This is because everything is now more expensive.
We also noted that actually, benefits still weren’t worth as much in real terms as they were before the coronavirus (Covid-19) pandemic. So, given that this year’s rise wasn’t a meaningful one at all, the DWP will leave people even worse off in April 2024 if it fails to increase benefits in line with inflation.
However, earlier this year think tank the Institute for Fiscal Studies (IFS) also issued a stark warning. It’s one that has huge implications for the DWP’s latest potential move.
Benefits not recovering until 2026?
The IFS said in February that even with the current inflation-based increases in things like Universal Credit:
Compared with their pre-pandemic… levels, real benefit rates were 7.6% lower in 2022… and will be 6.2% lower in 2023… and still 2.0% lower in 2024
It also noted that:
Astonishingly, it is not until April 2025 that benefit rates are set to recover the ground they lost over the autumn and winter of 2021
That is, benefits will not be worth what they were before the pandemic, in real terms, until April 2025.
However, the IFS’s assessment was based on the DWP increasing benefits like Universal Credit in line with inflation each April. Now, with the department eyeing up only raising them in line with wages from April 2024, it is likely that they will not return to their pre-pandemic value until at least 2026.
Jumping through ever-tightening hoops
All this comes after years of freezes and real-term cuts to benefit rates since 2016. Yet the Tories are still hell-bent on penalising people claiming social security anyway – under the guise of saving £1bn. This amount of money is, of course, a drop in the ocean of overall welfare expenditure. £1bn is also nothing in terms of the record-breaking public debt the Tories have racked up on all our behalf. In fact, it’s just 0.04% of the £2.6tn the government owes.
So, the DWP pushing another real-terms benefits cut can only be seen as one thing: ideological. It’s a continuation of the ‘benefit scrounger’ narrative successive governments have pushed for years. Another real-terms benefit cut also plays into the Tories’ current drive to force as many people into work as possible – regardless of whether they can actually work or not. However, ultimately it is – as the Canary has repeatedly said – the DWP working as intended.
There’s no such thing as a social security net in the UK. There are ever-tightening hoops people have to jump through, just to barely survive – all whilst politicians are determined to make people reliant on benefits an underclass in the UK.
Featured image via VideoBlogg Productions/the Canary and Wikimedia
By Steve Topple
This post was originally published on Canary.
