The increase is lower than the current rate of inflation of 11.1% and follows years of cuts to the real value of benefits affecting the lives of 9 million households – 7 million of which include someone in work. The rise will cost £11bn and was bigger than the 5.4% increase that had been feared. In what he described as “targeted support to help our most vulnerable citizens”, Jeremy Hunt said a family on Universal Credit would benefit next year by around £600 on average. But analysts said millions still faced an extremely difficult winter, as increased payments would not arrive for another five months. Hunt also announced that after a 630,000 rise in the number of economically inactive working-age adults since the start of the pandemic, 600,000 more people on Universal Credit will be asked to meet a job coach to increase their hours or earnings. Rebecca McDonald, chief economist at the Joseph Rowntree Foundation, said: “By taking this stance, the government has recognized that people cannot afford to see benefits eroded further. But families are facing the worst winter many will remember and are looking forward to April – they need help now to get through a winter of rising costs. “Even with the upgrade, rates are at historic lows and struggling households are increasingly unable to make ends meet. This winter and beyond will continue to be a daunting obstacle course just to afford the essentials.” Alison Garnham, chief executive of the Child Poverty Action Group, said it was a relief that benefits and the benefit cap would rise in line with inflation, but added: “This is only the fourth time benefits have been increased by inflation in recent years 10 years. as a result of austerity – which the chancellor today praised – there are almost 4 million children living in poverty in the UK. Today’s package will not stop the ice from cracking under struggling families.” Action for Children policy director Imran Hussain said: “The families we support will be greatly relieved”, but said benefit levels were “still very out of touch with what families need to live on”. Hunt announced additional cost of living payments next year of £900 for households on means-tested benefits, but only £150 for people on disability benefits, which Disability Rights UK said was below inflation and as if “flying peanuts”. The charity’s chief executive, Kamran Mallick, said: “Although the government has not completely put the knife under the knife for disabled people, it is still twirling it between its fingers.” Hunt also announced a cap on social rent rises – affecting 4 million households – below inflation of 7% in 2023-24. The cap will not cover people in shared ownership properties, but housing associations representing 80% of shared housing are committed to matching it, the National Housing Federation said. The national living wage will rise in April by 9.7% to £10.42 – an annual pay rise worth more than £1,600 for a full-time worker, but still below current inflation. As predicted, the chancellor increased state pensions in line with inflation, with an increase of £870 since April – the biggest in absolute terms. It also increased pension credit by 10.1%, worth up to £1,470 for a couple or £960 for a single pensioner.
