UK Government fail to rule out real terms benefits cuts for poorest to pay for tax cuts for the rich
The UK Government has failed to rule out a real terms benefit cut for the poorest in order to pay for the tax cuts for the rich revealed in last week’s mini-budget.
A Conservative former pensions minister says it would be “a travesty” if the Government increased the pensions of the UK’s poorest citizens by less than the consumer price index.
Not lifting benefits in line with inflation would amount to a real terms cut to tens of millions of the poorest in the UK.
The UK Government is scrambling to plug a £45 billion black hole in its finances after markets reacted badly to last week’s tax cuts, including scrapping the higher tax rate for those who earn over £150k completely.
Asked yesterday if benefits would rise with inflation, Chancellor Kwasi Kwarteng said: “It’s premature for me to come to a decision on that, but we are absolutely focused on making sure that the most vulnerable in our society are protected through what could be a challenge.”
Former pensions minister Baroness Altmann responded in the Daily Express: “The pension credit has always been legally required to rise at least in line with earnings inflation, but the Government can choose to do better.
“I believe it must do so. If these poorest older citizens only see their pensions increase by the lower earnings figure, it would be a travesty.
“This is because the Government legislated last year to strip them of their earnings protection and instead replaced it by price inflation up-rating.”
Baroness Altmann, who served as pensions secretary from 2015 to 2016, added: “I hope the Chancellor recognises that it would be absolutely wrong to betray these pensioners a second time. Many of them are elderly, vulnerable and already struggling to meet rising living costs.
“We owe it to them to make sure they are better protected.”
The Government is trying to reassure markets and voters that the recent economic turmoil is under control.
There have been days of chaos in the financial markets and fears of rocketing mortgage bills sparked by the Chancellor’s mini-budget last week.
On Thursday a charity warned failing to meet a commitment to increase benefits in line with inflation would lead to disabled people “starving and freezing in their own homes”.
Baroness Altmann’s immediate predecessor as pensions minister said those on benefits had “already faced a financial squeeze this year”.
Ex-Liberal Democrat MP Sir Steve Webb said: “People on benefits have already faced a financial squeeze this year, with benefits rising by only 3.1% in April when inflation was about 9%.
“Many will already have tightened their belts and may be relying on credit to manage from week to week,” he added in his letter to The Times’ editor.
“There is only so much pain that these groups can be expected to bear to make the Chancellor’s sums add up.”
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