From the TUC

Benefits uprating bill: the breaking of the inflation link could be the biggest announcement for living standards

05 Dec 2012, by in Society & Welfare

Following the announcement of his decision to reduce tax credit and benefit uprating in years ahead the Chancellor announced today that the Government will be introducing a Welfare Uprating Bill, stating that

To bring all these decisions for many benefits over many years together, we will introduce into Parliament primary legislation – the Welfare Uprating Bill.

My understanding is that this is because current legislation requires benefits to be uprated in line with prices. When they broke the RPI link, the government was still able to use existing legislative means to change the inflation measure – CPI still fell within the terms of the existing law.

But breaking the link with any inflation measure will require a new bill.

The more dramatic and concerning conclusion of this move is that reinstating the inflation link will also require new primary legislation – which would need to be introduced in 2016 if the three year uprating reduction is to come to an end. By that time we’ll have a new Government – the decision they take will no doubt depend on their political priorities.

This means the inflation link is now effectively broken. This move could turn out to be as significant as the Thatcher Government’s move to break the link beween benefits and earnings in the 80s.

One Response to Benefits uprating bill: the breaking of the inflation link could be the biggest announcement for living standards

  1. The implications of 1% uprating | ToUChstone blog: A public policy blog from the TUC
    Dec 5th 2012, 5:37 pm

    […] Nicola has explained why getting rid of benefit uprating requires new legislation. As she says, this could easily have a huge impact on living standards, bigger than anything else in the Autumn Statement. I’ve tried to work out what this is likely to mean in practice and it looks as  though, in just three years, single unemployed  people will lose £2.85 a week compared with the uprating policy we have now and £3.85 compared with the policy we had before 2010. […]