William Eichler 11 April 2022

Value of benefit payments at 50-year low

Value of benefit payments at 50-year low  image
Image: Minerva Studio/Shutterstock.com.

Today’s increase in benefit payments marks the greatest fall in the value of the basic rate of unemployment benefit since 1972, think tank says.

The 3.1% increase that comes into effect today is based on inflation as of last September. However, inflation is expected to hit 7.7% this month. This means households in receipt of benefits will experience a real-terms cut to their incomes.

Since 1972, ministers have decided how much to increase benefit levels by each year based on an assessment of inflation. Since 1987, they have typically considered the rate of inflation the previous September to decide benefit levels each April.

A new analysis by Joseph Rowntree Foundation (JRF) has found that for eight of the 10 benefit level changes between 2013 and 2022, the basic rate of unemployment benefits has lost value, leaving it at a 35-year low in real terms.

A recent analysis by the JRF warned that such a real-terms cut will pull 600,000 people into poverty, around a quarter of whom are children.

‘With living costs predicted to rise further this year, it is difficult to comprehend the logic behind a choice not to act to protect the value of benefits, thereby imposing the single biggest benefit cut of its kind in fifty years. The Government has chosen to weaken the incomes of the poorest at the worst possible moment,’ said Peter Matejic, deputy director for evidence & impact at JRF.

‘A decade of cuts and freezes to benefits have left many people in our society in increasingly desperate situations, struggling to afford food, energy and basic hygiene products. Without urgent action from the government, the stark reality is that the situation could get much worse.

‘The Government must, at a minimum, ensure that benefit rises match the real rise in living costs as an immediate first step to protect people from hardship. Beyond this, the government needs to further strengthen our social security system, which was already woefully inadequate even before the cost of essentials began to shoot up.’

A Government spokesperson said: 'We recognise the pressures people are facing with the cost of living, which is why we’re providing support worth £22bn across the next financial year and, as was approved by Parliament, benefits are being uprated by the usual measure, September’s inflation figure.

'Our package of support includes putting an average of £1,000 more per year into the pockets of working families via changes to Universal Credit, cutting fuel duty and helping households with their energy bills. We have also boosted the minimum wage by more than £1,000 a year for full-time workers and are raising National Insurance thresholds so people keep more of what they earn.'

For your free daily news bulletin
Highways jobs

Interim Head of Fostering

Tile Hill
Negotiable day rate
We are working with a local authority client in London who is looking for an Interim Head of Fostering, the local authority was last inspected as “... London (Central), London (Greater)
Recuriter: Tile Hill

Interim Head of Children in Care and Care Leavers

Tile Hill
Negotiable day rate
We are working with a local authority client in London who is looking for an Interim Head of Children in Care and Care Leavers, the local authority... London (Central), London (Greater)
Recuriter: Tile Hill

Head of Regeneration and Economy

City of York Council
£59,593 - £68,094
York is a wonderful place to live and work and it is quite rightly famous across the globe. York, North Yorkshire / Hybrid
Recuriter: City of York Council

Clinical Lead, North Essex

Essex County Council
Clinical Lead, North EssexPermanent, Full TimeUp to £57,869 per annumLocation
Recuriter: Essex County Council

Assistant Director Legal,&Governance/Monitoring Officer

Rochdale BC
£70,340 - £81,589
The Assistant Director role has breadth of responsibility beyond legal services incorporating Constitutional and Democratic Services Rochdale, Greater Manchester
Recuriter: Rochdale BC

Partner Content

Circular highways is a necessity not an aspiration – and it’s within our grasp

Shell is helping power the journey towards a circular paving industry with Shell Bitumen LT R, a new product for roads that uses plastics destined for landfill as part of the additives to make the bitumen.

Support from Effective Energy Group for Local Authorities to Deliver £430m Sustainable Warmth Funded Energy Efficiency Projects

Effective Energy Group is now offering its support to the 40 Local Authorities who have received a share of the £430m to deliver their projects on the ground by surveying properties and installing measures.

Pay.UK – the next step in Bacs’ evolution

Dougie Belmore explains how one of the main interfaces between you and Bacs is about to change.