Chancellor told to make £729 payment in June for people on Universal Credit

Former Tory chief Sir Iain Duncan Smith has referred to as for advantages to be instantly uprated in step with inflation to supply a “shield” in opposition to the sting of mounting residing prices – with a one-off cost of £729 on the similar time. He mentioned rebates and discretionary funds characterize “a step in the wrong direction for tackling poverty”, arguing it might be higher to uplift Universal Credit (UC) because it “links benefits to work”.

The advice to convey advantages in step with inflation is about out in new report from the Centre for Social Justice (CSJ) – a assume tank based by Sir Iain in 2004 – calling for a “special fiscal event”, funded by above-forecast tax receipts, to ease the pressure on cash-strapped households. UC funds rose by 3.1% in April, in step with the Shopper Costs Index (CPI) price of inflation within the 12 months to September 2021.

In the meantime, CPI inflation rose to 9% within the 12 months to April, Workplace for Nationwide Statistics (ONS) information signalled on Wednesday, up from an already excessive 7% in March. In its report, the CSJ says the Authorities ought to take into account reviewing the speed of advantages quarterly, slightly than yearly, a minimum of so long as the “current period of unusual inflationary pressure” lasts.

The assume tank says the primary improve ought to come on the finish of June. It claims that bringing UC in step with inflation would see over 4 million households achieve a median of £729 further assist to stave off the cost-of-living disaster over the approaching 12 months.

As a part of its package deal of suggestions, the CSJ can also be calling for a rise to UC work allowances, which would offer “an effective tax cut” for 1.66 million poorer, working households, value £733 million, or on common £442 every.

These measures mixed – uplifting funds in step with inflation and boosting work allowances – would value round £3.8 billion, the assume tank estimates. Sir Iain mentioned: “The CSJ is calling for a special fiscal event to tackle this crisis, and to provide a shield against the worst of inflation for those most struggling.

“In UC the UK has a world-class social security system that is data-rich and effectively targeted at the households that need it most. Rebates and discretionary funds represent a step in the wrong direction for tackling poverty. UC links benefits to work, ensuring those that are able can move into and progress within employment. Thus it is a hand up, not a hand-out.”

He added: “While the decision to cut the UC taper in the autumn budget put £1,000 back into the pockets of three million claimants, much of its value will be wiped out by inflation. And it will do nothing to protect those who are not in work. With UC only uprated by 3.1% in April, those who rely on welfare for their income will experience a 7% cut.

“To prevent this, the Chancellor and Secretary of State for Work and Pensions should implement an emergency in-year uprating, bringing UC into line with inflation to ensure it covers the true cost of living.”

The CSJ additionally needs the Authorities to droop UC debt repayments for six months and forgive historic money owed “born of design issues in the legacy benefits system”.

As well as, environmental levies ought to be absorbed into normal taxation, and the vitality value cap ought to be reviewed quarterly slightly than each six months “to avoid cliff-edges in prices”, it mentioned. Final week, Mr Sunak mentioned he was not capable of increase the funds greater than 3.1% on account of an outdated laptop system that the Division for Work and Pensions makes use of.

The Institute for Fiscal Research financial assume tank has steered the poorest households is perhaps going through inflation of 10.9%. That is larger than common as a result of they spend a bigger portion of their cash on heating and lighting their properties.

A Authorities spokesperson mentioned: “We recognise the pressures on the cost of living and we are doing what we can to help, including spending £22 billion across the next financial year to support people with energy bills and cut fuel duty. For the hardest hit, we’re putting an average of £1,000 more per year into the pockets of working families on Universal Credit, have boosted the minimum wage by more than £1,000 a year for full-time workers and our Household Support Fund is there to help with the cost of everyday essentials.

“We also know that people are at least £6,000 better off in full-time work than on benefits, so we are redoubling our efforts to help people find work and progress.”

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