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