MILLIONS of people will see their benefits rise next year – but exactly how much more they will get will depend on the government.
Liz Truss is reportedly preparing to U-turn on plans to make a real-terms cut to benefit payments.
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The Prime Minister had previously failed to commit to increasing benefits such as Universal Credit in line with inflation.
Instead, that would mean them increasing in line with wages.
The increase from next April will be made in line with inflation or wage figures taken from September this year which are yet to be confirmed.
But with inflation for August at 9.9% and average earnings 5.2% in the same month, if this trend continued into September it would mean an over 4.5% pay cut in real terms for millions.
A real-terms pay cut is when your pay rises below the level of inflation.
However, Truss is now reportedly set to make a U-turn, meaning those on benefits will receive a pay rise based on inflation and not wages.
That would mean a roughly 10% pay increase from April.
Benefit payments vary depending on which type you’re on, including Universal Credit, so payments will be different for each person.
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Below, we detail how much some benefits will increase if they rise in line with inflation compared to wages.
Of course, how your benefits will go up is not yet confirmed.
Truss is expected to set to reveal whether benefits will be increased in line with inflation within weeks though.
Universal Credit
Almost five million people claim Universal Credit, which was first introduced in 2013.
Under the system, you receive different amounts depending on your circumstances. They are:
- If you’re single and under 25 – £265.31
- If you’re single and 25 or over – £334.91
- If you live with your partner and you’re both under 25 – £416.45 (for you both)
- If you live with your partner and either of you are 25 or over £525.72 (for you both)
If you are looking at how much your Universal Credit will rise to from April next year based on inflation at 10%, you just have to divide your current payment by 100 and multiply by 10.
You then add that onto your current payment.
So, if you live with your partner and you’re both under 25 you’ll currently be getting £416.45 between you a month.
If your Universal Credit were to rise in line with inflation at 10%, your payment would go up by £41.64 to £458.09.
If it were to rise in line with wages at 5.5%, your payment would go up by £25.19 to £441.64. That’s over £15 less per month.
Housing Benefit
Housing Benefit is designed to help you pay your rent if you’re unemployed, on a low income or claiming benefits.
It is being replaced by Universal Credit through what’s called “Managed Migration”, however not everyone has been transferred across yet.
What you get through Housing Benefit depends on your circumstances – including how much you pay in rent, where you live and your personal circumstances.
But if you were theoretically receiving £100 every four weeks and that were to rise in line with inflation at 10%, you would receive £110 a month, a £10 pay rise.
If it were to go up with wages at 5.5%, you would receive £105.50 a month, a £5.50 pay rise. That’s a difference of £4.50.
Over the course of a year, that’s a £234 difference.
Income Support
Income Support is extra money for people who don’t have enough to live on.
It’s a means-tested benefit which means your income, savings and any sources of cash are taken into consideration when deciding how much you’ll receive.
How much you get depends on your personal circumstances, however if you’re single and aged between 16 and 24, your weekly payments start from £61.05.
If it were to go up in line with inflation at 10%, you would receive £67.15 a week – a £6.10 pay rise.
If you are aged between 16 and 24 and single and your weekly payment were to go up in line with wages at 5.5%, you would receive £64.40 a week – a £3.35 increase.
That means you’ll get £2.75 less a week if your payment go up in line with wages and not inflation.
Over the course of a year, that’s a £143 difference.
Child Benefit
Child Benefit is paid to parents or guardians bring up a child is under 16 or under 20 and in approved education or training.
Again, what you’ll get depends on your circumstances, but if you only have one child under 16 you get £21.80 per week.
If that were to rise in line with inflation at 10%, you would receive £23.98 a week – a £2.18 pay rise.
If it were to rise in line with wages at 5.5%, you would receive £22.99 a week – a £1.19 pay rise.
That means you’ll get 99p more a week if your Child Benefit were to go up in line with inflation at 10%.
Spread across the 52 weeks of the year, that works out as an over £50 difference in total.
