You are here: Home - Saving & Banking - News -

Government to put end to benefits and inflation link

0
Written by:
18/09/2012
The Government is considering replacing the current practice of increasing benefits in line with inflation, according to the BBC.

The move, if implemented, would instead see annual increases in many benefits brought into line with average pay.

The plans, which would affect both jobseeker’s allowance and housing benefit, were first mooted in September last year, when above average inflation figures of 5.2% forced Chancellor George Osborne to consider cost-cutting measures.

It was opposed by a combination of work and pensions secretary Iain Duncan Smith and the Liberal Democrats.

The new move is set to be especially unpopular with Liberal Democrat activists, who meet in Brighton this week for the party’s annual conference.

The Institute of Public Policy Research estimated that, if benefits had been linked to earnings, and not inflation, over the last two years, jobseeker’s allowance would be a weekly £66.81 rather than £71.

“Benefits are rising faster than earnings; this does not encourage people to go to work. Benefits were never meant to be a salary replacement,” a source told the BBC.

“We are aware that there is the effect on poverty to be considered but we believe that benefits have risen by so much over the last few years that a freeze for a couple of years would help people deal with the transfer. When you see the savings possible, it is simply mind-boggling.”

Tag Box

Debt

Pension

Spending

Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
2206083-piggy-banks
Signing up to a pension scheme before auto-enrolment could see pots £10,000 better off

Signing up to a pension scheme ahead of auto-enrolment could see some savers with pension pots worth £10,000 more than...

Close