Big boost to benefits as payments set to rise £253 next year for millions Rachel Reeves confirms in budget announcement
MILLIONS of people on benefits are set to get an extra £253 next year after the Chancellor confirmed an increase in her Autumn Statement.
From next April, claimants will see payments rise by 1.7%.
Meanwhile those on state pension will see payments rise by more as a different mechanism is used to increase pensioner payments.
Addressing Parliament today, Rachel Reeves confirmed the rate increases for both.
She said: “Our manifesto committed to the triple lock meaning spending on the state pension is forecast to rise by over £31billionn by 2029-2030 to ensure that our pensioners are protected in their retirement.
“This commitment means that while working-age benefits will be uprated in line with CPI, at 1.7% the basic and new State Pension will be uprated by 4.1% in 2025-26.”
The “trick and treat” Halloween package included:
- A freeze to fuel duty for a 15th consecutive year in a win for The Sun’s Keep It Down campaign
- A penny off a pint by cutting draught beer duty, but raising booze taxes on other drinks
- A gloomy forecast of sluggish growth in a blow to Labour’s flagship mission
- A stamp duty rise for second-home buyers of two percentage points
- A pay rise for millions as the minimum wage was increased by £1,400 a year
- A hike to a packet of cigarettes as smoking duties were raised
- A new tax on vapes ahead of the looming ban on disposable e-cigs
- Higher taxes on air passenger duty for private jets that hits the wealthy
- A benefits crackdown with Ms Reeves telling jobless Brits to “get back to work”
- An increase to the state pension of £473 next year through the triple lock
- An inheritance tax raid through freezing the rates people pay
- An increase to the Carer’s Allowance to give cash to 60,000 more carers
Benefits rise each year in April in line with the rate of CPI inflation the previous September, known as uprating.
September’s rate of inflation was announced earlier this month as 1.7%, according to the Office for National Statistics (ONS).
Inflation is a measure of how the price of goods and services have increased compared to the same time last year.
If benefits rates didn’t increase at the same pace then people would be worse off as more of their income would be spent on the same items.
Meanwhile, the state pension rises in line with whatever is highest out of September’s inflation, wages for May to July or 2.5% under the triple lock.
Because of this, those in retirement will see a rise of 4.1% or £473 in money terms as wages were the highest.
The 1.7% increase to benefits which will come in from next April will be lower than last year though.
That’s because inflation is far lower than in the past couple of years, and the latest reading marked the first time that inflation fell below the Bank of England‘s 2% target in three years.
While a low reading can be good for the economy, the figure means millions claiming benefits will get a smaller boost than in previous years.
In April this year the majority of benefits went up by 6.7% and some by as much as 8.5%.
Meanwhile, in 2023 inflation-linked benefits and tax credits were hiked by 10.1%.
HOW MUCH MORE WILL I GET?
Previous analysis by the Joseph Rowntree Foundation, which works on tackling poverty, said the 1.7% increase means the standard allowance basic rate of Universal Credit will rise by around £1.50 a week from its current level of £90.55.
Meanwhile, the basic rate for couples will go up by around £2.50 a week from the current level of £145.13 a week.
The group said the changes will mean a typical low-income family with two children would see its annual UC award rise by £253 next April.
The following benefits are also legally required to increase each April in line with the previous September’s rate of inflation:
- Personal independence payment (PIP)
- Disability living allowance
- Attendance allowance
- Incapacity benefit
- Severe disablement allowance
- Industrial injuries benefit
- Carer’s allowance
- Additional state pension
- Guardian’s allowance
This means that those who currently receive the lower rate of Attendance Allowance will see their weekly payment rise by £1.23 to £73.85.
Those on the higher rate of £108.55 will see their weekly allowance rise by £1.85.
In comparison, those on Carers Allowance will see their weekly payment rise by £1.39 to £83.29.
WATCH RACHEL REEVES ON NEVER MIND THE BALLOTS
By Ryan Sabey, Deputy Political Editor
RACHEL Reeves will be grilled in a special Budget edition of The Sun’s Never Mind The Ballots show today.
Our Political Editor Harry Cole will put the Chancellor on the spot shortly after she’s finished delivering her crucial address in the House of Commons.
It will be available to watch on thesun.co.uk, YouTube and Sun social channels at 5.30pm.
Topics will include her decision on whether to spare motorists a fuel duty rise, and the expected eye-watering tax rises she will impose.
Since its launch earlier this year, NMTB has cemented its place at the heart of British politics.
During the General Election campaign The Sun was the only print publisher to host back-to-back grillings of Rishi Sunak and Sir Keir Starmer.
Footage from The Election Showdown has been viewed over 15 million times.
NMTB has also featured interviews with ex-PMs Boris Johnson and Liz Truss, as well as senior politicians Nigel Farage, James Cleverly, Wes Streeting, Steve Reed and Bridget Phillipson
What the budget means for benefit claimants
Around one million families on Universal Credit are also set to get a £420 boost as part of the Chancellor’s Autumn Budget.
Rachel Reeves has confirmed she will lower the cap on the maximum level of deductions that can be taken from a person’s benefit payments.
The Department for Work and Pensions can deduct money from a Universal Credit claimant’s allowance to help them pay back debt.
These can cover a range of debts, such as benefit advances, overpayments of child tax credits, rent and council tax areas, as well as outstanding water and utility bills.
Under previous rules, the DWP and third parties could deduct up to 25% of a claimant’s standard allowance to help manage their debt repayments.
But this has now been capped at 15% in efforts to help some of the worse-off homes across the UK pay off what they owe over a longer period.
The measure known as the Fair Repayment Rate will come into effect next April.
BRITAIN’S MOST MEMORABLE BUDGETS
Today is the first Labour budget for 14 years – and the first ever to be delivered by a female Chancellor.
Brits are bracing for a raft of tax hikes as Rachel Reeves tries to plug the “£22billion black hole” she says she’s found in government accounts.
Here are five other budgets which have caused a stir over the years.
1979 – Geoffrey Howe, Conservative
Margaret Thatcher’s Chancellor Geoffrey Howe slashed both the top rate of income tax and the standard rate.
He also doubled VAT – shifting the tax burden from income to consumption in a huge change for Brits.
Howe also eased controls on foreign exchange in a bid to control inflation.
The budget signalled a massive break from the last Labour government and set the pattern for decades to come.
1988 – Nigel Lawson, Conservative
Nigel Lawson (dad to domestic goddess Nigella) massively slashed income tax again.
The deputy Commons speaker twice cleared the chamber amid noisy protests from Labour MPs slamming the tax cuts.
Lawson also set off a property bonanza by announcing an end to double mortgage tax relief for couples buying homes.
1993 – Norman Lamont, Conservative
In March 1993 the economy was still reeling from Black Wednesday, when the pound crashed out of the European exchange rate mechanism.
Lamont announced tax rises including VAT on domestic gas and electricity.
Later that year Lamont’s successor Ken Clarke froze personal tax allowance and brought in stealth taxes on insurance and plane passengers.
The Lamont and Clarke budgets marked the end of the Tories’s scything tax cuts – and set the stage for Labour’s return to office in 1997.
2002 – Gordon Brown, Labour
Brown raised national insurance by a penny on the pound to fund higher spending on the NHS.
The future PM had fretted over a possible backlash from voters who had re-elected Labour in 2001.
But he managed to pull off the largest rise in health spending in the history of the NHS.
2009 – Alistair Darling, Labour
Labour’s last budget before today came amid the credit crunch and soaring unemployment.
Darling ramped up taxes and borrowing in a bid to fill up draining Treasury coffers.
Tory leader David Cameron blasted Labour’s ‘utter mess’ – and was in power a year later.
2022 – Kwasi Kwarteng, Conservative
Kwarteng unveiled his economic package less than a month after becoming Liz Truss’s Chancellor.
Technically, it was a fiscal statement rather than a budget – but it turned out to be just as seismic.
Rising Tory star Kwarteng announced £45billion in tax cuts including a drop in all rates of income tax.
Markets took frights and the pound went into freefall before the Bank of England waded in to stop a run on UK pension funds.
Mortgage rates soared and Kwarteng was out of the job just three weeks later.