The Spending Plan policy 20: freeze benefits for two years then uprate with CPI

May 08, 2015 11:00 AM

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Benefits are usually uprated with inflation measured by the consumer prices index in the preceding September. However in 2013–14, 2014–15 and 2015–16, the uprating of most working age benefits, excluding disability benefits, has been limited to 1 per cent.

However earnings growth in these years has been weak and lower than the change in CPI.

For 2015–16, the CPI in September 2014 increased by 1.2 per cent whilst average weekly earnings increased by just 0.6 per cent. Even by limiting the uprating to 1 percent, working age benefits are still set to increase by more than they would have had they been uprated in line with earnings.

This both disincentives work and is unfair on those in work and not claiming benefits.

Working age benefits and tax credits should be frozen in 2016–17 and 2017–18 and then uprated by CPI, the increase in which is forecast to be lower than that in average earnings over the forecast period.

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