Universal Credit claimants could be £600 worse off next year

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James Cleverly defends government's actions amid inflation crisis

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A family with two children earning less than £24,700 will lose out by over £600 if benefits increase by earnings instead of inflation at 10.1 percent, according to the research by Child Poverty Action Group and Action for Children. The charity highlighted that “only a fraction of this” will be offset by lowering the level of National Insurance that is paid. The National Insurance cut is one of the few elements of the Government’s September mini-budget which has remained.

If benefits increase by earnings, which is currently 5.5 percent, instead of inflation figures, a low-earning couple with two children looks set to lose around £752 in 2023-24.

The analysis used the amounts people receive from Child Benefit and the non-housing elements of Universal Credit.

The charity stated that as parents in the lowest-paid jobs gain the least from National Insurance cuts they, therefore, see the “biggest cumulative loss”. 

Chief executive of Child Poverty Action Group Alison Garnham said that many more families will be “pushed to the brink of survival” unless they receive support.

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She said: “The UK is already trapped in a child poverty crisis and many more families will be pushed to the brink of survival without support.

“The bare minimum government can do is to confirm it will raise benefits in line with inflation. 

“With so much uncertainty and fear, families are terrified, and it’s unthinkable that children will be forced to bear the brunt of the government’s economic mistakes.”

Child Poverty Action Group’s analysis data was based on a couple with two children between the ages of six and 12 with one member of the couple working full-time.

It also found that the average hospital porter with an average wage of £27,665 would only gain £114 from the National Insurance changes.

However, they will lose £752 if benefits increase by earnings instead of inflation. 

This would leave this person and their family around £637 worse off.

A hairdresser with an average earning of £15,405 would gain just £35 from National Insurance changes.  

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They will however see a loss of around £752 if uprating is linked to wages, leaving the family £716 worse off.

Child Poverty Action Group does highlight that the losses to social security “does vary by family type”. 

It said: “The more needs the family has, the more social security they stand to lose.”

The group’s analysis also found that a working couple with two children where one partner is caring for a disabled child could lose over £1,000. 

The charity stated that the losses “risk being baked-in to future years” as even if the Government promise to uprate them in the future, people will continue to be much worse off in cash terms each subsequent year if benefits don’t increase with inflation this year. 

It said: “The only way to compensate for this would be if a future government raised benefits at a rate higher than inflation.”

The Office for National Statistics (ONS) announced today that the UK’s inflation rate has returned to a 40-year high of 10.1 percent. 

This figure usually dictates how much benefits should go up in April next year, and earlier this year, former Chancellor Rishi Sunak confirmed that the Government was going to commit to it.

However, the current Chancellor Jeremy Hunt and Prime Minister Liz Truss have yet to confirm whether they will go through with it.

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