Exact amount benefit payments could be cut from April
MILLIONS receiving Universal Credit and other legacy benefits could face a real-terms pay cut next April.
Benefit payments may not rise in line with inflation and could increase instead with average earnings.
Liz Truss' refusal to raise benefits in line with inflation could mean that millions will have their monthly payments cut by hundreds from April 2023.
If incomes don't rise at the same rate as prices it leaves people worse off and is a pay cut in real terms.
The Department for Work and Pensions (DWP) usually uses September's inflation figures to make the decision on benefit uprating from the following April.
And if benefits were to rise in line with the latest figures on UK earnings - payments will increase by 5.5% according to July's statistics.
READ MORE IN MONEY
However, this is 4.4% lower than the latest rate of inflation which was 9.9% in August.
The PM is expected to say exactly which figure she will use to increase payments by the end of November.
For Universal Credit claimants receiving the standard allowance and under the age of 25 - a rise in line with wages instead of inflation would see payments drop by £140.04 in real terms next year.
If payments for those under 25 went up in line with August's inflation, recipients could expect the standard allowance to rise from £265.31 to £291.57 a month or £3,498.84 a year from April 2023.
But if payments rise in line with July's average UK earnings, the standard allowance would rise from £265.31 to £279.90 or £3,358.80 a year.
Most read in Money
Those over the age of 25 would see their payments drop by £176.88 in real terms from April 2023.
If payments for those over 25 went up in line with August's inflation, recipients could expect the standard allowance to rise from £334.91 to £368.07 a month or £4,416.84 a year from April next year.
But if payments rise in line with July's average UK earnings, the standard allowance would rise from £334.91 to £353.33 or £4,239.96 a year.
Those on Universal Credit can also get different extra payments depending on their circumstances - for example, if they have children, housing costs and caring responsibilities.
However, these figures are hypothetical and could go up or down depending on what inflation and average earnings are in September.
The figures are also only a guide and those receiving legacy benefits will also see a real terms pay cut if payments don't rise in line with inflation.
However, it has been noted that one key group of benefits recipients may still see their payments rise in line with inflation.
It's expected the DWP will confirm how benefits will be uprated in November.
Which benefits could see a pay cut?
The benefits that would see a real-term pay cut if they were to rise in line with average earnings and not inflation are:
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
- Income Support
- Tax Credits (Child Tax Credit and Working Tax Credit)
- Housing Benefit
- Council Tax Support
- Social Fund (Sure Start Maternity Grant, Funeral Payment, Cold Weather Payment)
- Universal Credit
- Child Benefit
Some could still see their payments rise with inflation
The Treasury is considering excluding those with disabilities and caring responsibilities from the real-term benefits pay cut.
It has now been suggested that those receiving Universal Credit linked to disability or care issues will have their allowance increased in line with inflation.
it's now suggested that those who claim Universal Credit with extra amounts for limited capability for work and or extra amounts for being a carer could still have their payments rise by inflation.
Those claiming extra amounts for limited capability for work can have their Universal Credit payments boosted by up to £354.28 a month.
And those claiming extra amounts for being a carer can have their monthly payments boosted by £168.81.
Individuals receiving attendance allowance may also see their payments rise with inflation.
This helps with extra costs if you have a disability severe enough that you need someone to help look after you.
It’s paid at two different and how much you get depends on the level of care that you need because of your disability.
The higher rate is £92.40, while the lower rate is £61.85.
A DWP spokesperson said: "The Secretary of State commences her statutory annual review of benefits and State Pensions from late October using the most recent prices and earnings indices available.
READ MORE SUN STORIES
Read More on The Sun
The DWP may use September's inflation figures to make the decision on certain benefit upratings from next April.
September's rate of inflation will be revealed this month.