Poverty campaigners have said it would be “morally indefensible” for ministers to fund tax cuts for the richest on the backs of the poor, amid speculation that ministers may reduce welfare benefits in the wake of last week’s ill-received fiscal statement.
Friday’s mini-budget announced billions of tax cuts benefiting high earners, but the subsequent market fallout plunged the UK’s finances into near crisis. The government is expected to have to make tens of billions of pounds of public spending cuts later this year to try to put the UK’s finances on a sound footing.
With prime minister Liz Truss having made high-profile political commitments to increase defence and NHS spending, welfare is seen as a prime candidate for cuts.
On Thursday the chancellor, Kwasi Kwarteng, refused to confirm that the government would stick to a promise made in May by his predecessor, Rishi Sunak, that benefits would be uprated by the September rate of inflation.
Raising benefit rates next April by less than the September rate of CPI inflation – likely to be about 10% – would save billions for the Treasury, but would be likely to increase poverty and hardship for low-income families alreadystruggling with the cost of living crisis.
The Resolution Foundation thinktank estimated that raising benefits in line with earnings – about 5% – rather than inflation would save the government £11bn next year, but would leave a couple with two children more than £1,061 a year worse off, and a single parent with one child £607 a year out of pocket.
Any cuts would follow a year in which benefits were uprated in April by 3.1% – linked to the September 2021 inflation rate – despite inflation having soared to about 9%. This resulted in the biggest fall in the real
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