IN-WORK benefits, the standard allowance in Universal Credit and support for disabled people could all be cut back as the UK Government aims to make efficiency savings.
Tony Wilson, the director of the Institute for Employment Studies, told The Herald he fears the Treasury are looking at making significant savings in the UK’s social security budget to help fund last week’s tax cuts for higher earners.
He said any changes risked pushing low-income and workless families “into destitution.”
The comments came as Liz Truss yesterday refused to deny that the planned uprating to benefits would be cancelled.
The Prime Minister would only say that it was “something the Work and Pensions Secretary is looking at and she will make an announcement in due course, as is the normal practice, for the autumn.”
The promise to link benefits to inflation was made by former chancellor Rishi Sunak earlier this year, as he set out his emergency package to help with the cost of living.
In May, he told MPs that he expected benefits for next year to be uprated, as usual, in line with the Consumer Price Index (CPI) figure for September, resulting in “a very significant increase.”
During a visit to the British Gas training academy, near Dartford, in north west Kent, Ms Truss was asked by press if the uprating would still take place, Ms Truss said: “The biggest part of the package that we announced was the support for families on energy as well as making sure that we reversed the national insurance rise.
“In terms of benefits uprating, that is something the Work and Pensions Secretary is looking at and she will make an announcement in due course as is the normal practice, for the autumn.”
Pressed for more information by journalists, the Conservative Prime Minister said: “As I said, this is something the Work and Pensions Secretary is looking at.”
According to Mr Wilson, the saving from not following through on the uprating promise would be between £3 billion and £4bn a year.
He estimated that the government would be looking to make savings of £40bn a year, which could be difficult, given the depth of cuts made during the austerity years.
Earlier this week, media reports suggested the Treasury would write to Cabinet ministers asking them to make savings within their existing departmental budgets.
Mr Wilson said: “On social security, my fear is that they won’t be able to stop at reducing uprating as, realistically, this will only save them a few billion a year in spending compared with the proposed tax cuts that are going to cost £40 billion a year, or more, to finance.
“But their scope to make further cuts is pretty limited, given the swingeing cuts that were made already by the Coalition Government.
“Their options would either be to cut the Standard Allowance in Universal Credit, which would push low-income and workless families into destitution, let alone poverty; or to cut in-work benefits which would reduce incentives to move into work or stay in a job; or to cut help for disabled people, where poverty rates are already highest; or to cut housing support, which barely covers the lowest of local rents; or possibly even to reduce pensioner benefits.
“It’s impossible to know what they might look to do but, of course, whatever they try to do would lead to really significant cuts to incomes for the poorest, in order to finance large tax cuts for the richest.
“Which would be awful for those families and for many communities, but doesn’t really make economic sense either as it’ll have a much greater impact on spending and consumer demand than tax cuts for the wealthy.”
Citizens Advice Scotland Director of Impact Polly Tolley said the government needed to rule out benefit cuts as soon as possible.
“Failing to uprate benefits with the cost of living would be disastrous enough, to actively cut the value of them would be damaging, dangerous and reckless,” she said.
“This time last year Universal Credit was cut by £20 per week and then bills and prices soared.
“Actively reducing these payments further will lead to more debt, more pressure on public services like the NHS and a wave of crippling stress and anxiety for people who simply cannot afford the cost of living as is.
“The government needs to rule these plans out as soon as possible.”
Kirsty Blackman, the SNP’s Work and Pensions spokeswoman at Westminster, warned that millions could fall below, or further below, the poverty line.
She said: “The Tories at Westminster have imposed 12 years of austerity, cut Universal Credit during the pandemic, brought in debt-inducing policies like the bedroom tax and two-child cap, and tanked the pound with their recent disastrous mini-budget.
“The very least they should do is uprate benefits in line with inflation,” she added.
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