(Bloomberg) — UK Chancellor Jeremy Hunt would save more than £4 billion ($4.9 billion) a year but plunge hundreds of thousands of children into poverty if he freezes welfare payments next year, new research showed
(Bloomberg) — UK Chancellor Jeremy Hunt would save more than £4 billion ($4.9 billion) a year but plunge hundreds of thousands of children into poverty if he freezes welfare payments next year, new research showed
The Resolution Foundation said a decision not to raise working-age benefits in line with prices would hit the incomes of 9 million households by an average of £470 and push an extra 400,000 children into absolute poverty. The benefit to the Treasury would amount to £4.2 billion, it calculated.
The warning comes after Bloomberg reported last month that the Chancellor is drawing up cost-saving measures ahead of the Autumn Statement on Nov. 22, including keeping the cash value of benefits unchanged.
Hunt and Prime Minister Rishi Sunak are coming under increasing pressure from Conservative MPs to cut taxes to boost the party’s standing with voters ahead of a general election widely expected next year. However, the public finances are already stretched, meaning any giveaways may have to be funded by spending cuts.
Benefits typically increase every April using the rate of inflation in the previous September. The figures for September this year are due to be published on Wednesday, with economists expecting a slight slowdown to 6.5%.
Lindsay Judge, research director at the Resolution Foundation, said a benefits freeze would “come at a terrible cost” and deepen “a cost of living crisis that is already hitting low and middle income households the hardest.”
“At a time when the incomes of the poorest half of the population are already set to fall next year, failing to uprate working-age benefits in line with prices would be hard to defend,” she said.
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