Inflation ‘eating into’ state pension payment increase

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Chancellor Jeremy Hunt announced a significant hike to DWP payments during his Autumn Statement last year. Despite this boost to prominent benefits like the state pension and Universal Credit, experts are warning that inflation will “eat into the increase” for claimants.

This follows figures from the Office for National Statistics (ONS) being published this week which showed Consumer Price Index (CPI) inflation for the 12 months to February 2023 rising to 10.4 percent.

As part of the Government’s promise to raise the rate of the majority of benefits, payments like Universal Credit and PIP are being hiked by 10.1 percent.

This is in line with the CPI inflation rate from September 2022 and is being used as the metric for the state pension triple lock.

Through the triple lock, payments are raised by whichever is the highest figure out of 2.5 percent, inflation or average earnings.

Despite those on the new state pension being set to see their annual payments exceed £10,000 for the first time, experts are highlighting that DWP benefits remain “survival rations” for many people.

Speaking exclusively to, Paul Brennan, the director of Benefit Answers, discussed why the pending rate hike may not be enough.

The social security expert explained: “Benefits have always been a safety net – a bit like survival rations. 

“Increasing your survival rations by ten percent does not stop them from still being survival rations.”

Specifically, he addressed the issue of soaring inflation and how that impacts benefit claimants in particular.

Mr Brennan added: “If inflation eats into wages then surely it must eat into the increase in benefits.

“More significantly people on benefits don’t always have the ‘buying power’ of people in work.”

Prime Minister Rishi Sunak has promised to half inflation by the end of the year and the Bank of England is aiming for the CPI rate to drop below three percent over the next nine months.

While these goals seem a far cry away, the Government has made a conscious effort to promote certain benefits to those who are failing to claim them.

Notably, Pension Credit is being highlighted by the DWP as a payment which people are failing to claim and the Government is encouraging people to apply.

However, Mr Brennan believes that, so far, the promotion of these benefits has not been entirely successful.

He said: “These campaigns have two problems. First, they still require the person to make a claim. 

“Secondly the last Pension Credit take-up campaign did lead to a lot of claims that they simply could not process and many have still not been processed.”

Once the payment hike is implemented next month, Universal Credit will be £292.11 and £368.74 a month for those under and over 25, respectively.

Couples who are both under 25 will get £458.51 monthly, with those over 25 receiving £578.82 a month.

Full new state pension payments get £203.85 a week with the 10.1 percent rate increase, while basic state pension payments will rise to £156.20 a week.

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