Vulnerable families will be pushed past breaking point if Chancellor George Osborne holds down the annual uprating of benefits, a charity has warned.
Unconfirmed reports suggested Mr Osborne is planning to slice £1bn off the welfare bill by breaking a long-standing procedure under which benefits are upgraded each year in line with September’s inflation rate.
Inflation hit 5.2per cent in September this year, creating a headache for the Chancellor, who was faced with the prospect of a larger-than-expected hike in the £200bn welfare budget.
Treasury sources were playing down as speculative the claims Mr Osborne plans to limit the upgrade to 4.5 per cent – average inflation over six months to September – and has secured the agreement of ministers including Work and Pensions Secretary Iain Duncan Smith to do so.
It was reported the savings – which would hit those claiming disability benefits, carer’s allowance, income support and jobseekers’ allowance by about £50 to £100 a year – would be used to halt a planned 3p-a-litre rise in petrol duties.
Mr Osborne is expected to announce the 2012/13 uprating – to come into effect next April – when he makes his autumn statement to Parliament on November 29.
The charity Family Action has warned a failure to deliver the expected 5.2 per cent increase at a time when soaring inflation is putting intense pressure on household budgets would create problems for the poorest families.
Family Action chief executive Helen Dent said: “A decision to break the link between inflation and welfare payments will put further pressure on families already at breaking point. We know that many of the families we work with are having to choose between a warm home and food on the table, and this will break some of them.”