Universal Credit claimants could be up to £670 worse off next year even if benefits are increased in line with the Consumer Price Index (CPI) inflation rate.
If benefits increase in line with September’s inflation rate, as expected, then they will be boosted by 6.7 percent from April 2024
Even with the potential benefit uplift, those on benefits could still be worse off as there may not be cost of living support. If the cost of living support ends in April next year it could offset any benefits increase.
An assessment by the New Economics Foundation found that many households are facing the prospect of further struggles as uncertainty over future support continues.
If the cost of living payments end as planned by April next year, some 40 percent of all families would fall short of the ‘minimum income standard’ – a widely used benchmark for a decent standard of living after housing and childcare costs.
The financial support available to a single person over 25 on Universal Credit would decrease by £670 in April 2024 compared with the same time last year.
In the same circumstances, a single parent with one child on Universal Credit would experience a drop in income of £350, while a couple over 25 with two children will see their benefits increase by just £35, the analysis found.
Gareth McNabb, director of external affairs at Christians Against Poverty (CAP) said: “As things stand, benefits are paid at a level that is entirely insufficient to even meet the barest essentials – the standard allowance in Universal Credit is £35 a week short. And inflation falling doesn’t mean prices are going down, just that they are rising less quickly.
“The Consumer Prices Index figure of 6.7 percent that is used for determining benefits increases is also not truly representative of what life on a low income is like, where a far greater proportion of their outgoings are on areas like food where prices are increasing by nearly double the average.
CAP’s research has found almost half of their clients will not have enough income to cover their essentials, facing an average shortfall of £85 a week.
It just can’t be right to be thinking about a pay cut for those on the lowest incomes, as the UK Government is reportedly considering, Mr McNabb explained.
Exclusive Freedom of Information data obtained by Metro.co.uk from councils across England reveals that more than 170,811 households approached their local authority as homeless while claiming Universal Credit between 2019 and 2023.
Figures also show that the number of homeless presentations from households in receipt of Universal Credit rose by more than half between 2019 and 2021, increasing from 23,730 to 36,598.
Meanwhile, 60,170 households claiming the monthly payment required accommodation in the year to June 2023.
While a 6.7 percent increase is expected it has not been confirmed by the Government, meaning there is a chance benefits rise by a different amount.
Jeremy Hunt is understood to be considering using a lower benchmark, possibly reflecting the expected level of inflation for the next year, to limit the cost to the Treasury.
Charity campaigners warned the Chancellor to ensure that benefits keep pace with prices so that claimants’ living standards do not fall over time.
The current standard allowance for single universal credit claimants under the age of 25 is £292.11 a month. If it increases by 6.7 percent it will go up £19.57, to £311.68.
For single claimants over the age of 25 it would go up by £24.71, from £368.74 to £393.45 a month. For people under 25 who live with a partner, the monthly payment would increase from £458.51 to £489.23 – a rise of £30.72.
And for those who live with a partner and if either is over 25, a 6.7 percent increase would mean a £38.78 rise in monthly payments, from £578.82 to £617.60.
During this tax year 2023/2024, millions of households are set to receive a £900 Cost of Living Payment. This is a tax-free amount to help people afford ever-increasing energy bills and other expenses such as food and rent during the cost of living crisis.
The £900 has been divided into three payments for those eligible and on means-tested benefits, such as Universal Credit, Pension Credit, or tax credits. However, campaigners urge the lack of this support in the next tax year 2024/2025 will offset any benefit rise.
A Government spokesperson said: “Our welfare system provides a strong financial safety net for those who need extra support, and there are nearly two million fewer people in absolute poverty than in 2010.
“But we know some families are struggling, which is why we have raised benefits by over 10 percent this year, are focused on halving inflation, have provided record financial support worth around £3,300 per household, and have announced another increase to the National Living Wage.
“To help people out of poverty through work, we are investing £3.5 billion to help thousands into jobs and are removing barriers for parents with the biggest ever expansion of free childcare – providing 30 free hours of childcare for working parents and support for children from nine months old to when they start school. This will save eligible parents up to an average of £6,500 per year.”
