The chancellor announced a number of benefits will rise by 1%, less than inflation, in a bid to save £3.7 billion a year by 2015/16. Local housing allowance base rates, which are used to calculate housing benefit for private renters, will rise in line with inflation next April but the rise will then be capped at 1% for the next two years, although areas with high rent increases will be exempt. Rises in the earnings disregard, the amount a claimant can claim before their welfare is reduced, for the universal credit will also be capped by 1% for two years.
Most working age benefits, including employment and support allowance, income support, and jobseekers allowance will be uprated by 1% over the next three years, as will child tax credits and working tax credits. Pensioner benefits will not be affected by the changes.
The government will introduce a Welfare Uprating Bill to implement the changes. Mr Osborne, in his statement today, said out of work benefits have gone up by 20% since 2007, twice the rate of average earnings. He said: “That’s not fair to working people who pay the taxes that fund them.”
Mr Osborne said the government would ‘support the vulnerable’. Carer benefits and disability benefit will increase in line with inflation. The statement did not include a cut to housing benefit for under 25-year-olds. David Cameron had previously hinted this was a possibility.
Source: Inside Housing
6th December 2012