Former Conservative leader Sir Ian Duncan Smith has called for the benefits to be adjusted immediately to inflation in order to provide a “shield” against the sting of rising living costs.
He said concessions and discretionary funds were a “step in the wrong direction to tackle poverty”, saying it would be better to increase universal credit (UC) as it “linked benefits to work”.
The recommendation is one of several outlined in a report by the Center for Social Justice (CSJ), a think tank founded by Duncan Smith that calls for a “special fiscal event” funded by the above-projected tax revenues.
The CSJ claims that adjusting UC to inflation will give more than 4 million households an average of £ 729 extra support next year.
It says the first increase should come in late June, and the government should consider reviewing the amount of benefits quarterly, not annually, at least for the duration of the “current period of unusual inflationary pressures.”
UC’s payments rose 3.1% in April, according to the consumer price index for inflation in the year to September 2021. This week, however, inflation peaked at a 40-year high of 9% in the 12 months to April, from 7 % in March.
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The Institute for Fiscal Research estimates that the poorest households may face 10.9% inflation – higher than average because they spend more of their money on heating and lighting their homes.
Chancellor Rishi Sunak said last week that he had failed to increase benefits by more than 3.1% due to an old computer system used by the Ministry of Labor and Pensions.
The government is issuing £ 150 in municipal tax rebates for many homes and offering a one-off refund of £ 200 for energy bills from October, but activists say that’s not enough.
Duncan Smith said: “The CSJ is calling for a special fiscal event to tackle this crisis and to provide a shield against the worst inflation for those most struggling.
“Discounts and discretionary means are a step in the wrong direction to tackle poverty. UC links benefits to work, ensuring that those who are able can relocate and advance in employment.
He added: “With the increase in UC by only 3.1% in April, those who rely on social security for their income will experience a decrease of 7%.
“To prevent this, the Chancellor and the Secretary of State for Labor and Pensions must introduce an urgent increase during the year, adjusting the UC to inflation to ensure that it covers the real cost of living.
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