I was up a mountain most of yesterday so missed the opportunity to provide knee-jerk reaction to the budget. It seems to have been the budget we expected and one that most working people feared. It was actually a better than expected budget for those old enough or vulnerable enough not to be working. While these groups will be hit hard by cuts in many public services, they will at least be protected from the brunt of the cost of living crisis by the inflation proofing of pensions and benefits. The DWP is one of the few departments that is likely to be spending more in the next two years.
At the risk of becoming a DWP spokesperson, I want to devote my budget blog to some small print as to how pensioners and those on benefits will be protected. I make no apology for reproducing what the DWP sent me, it makes sense for this information to be properly circulated. It is not headline grabbing like cuts in CGT or dividend allowances. Nor is it sexy like the gutting of Solvency II regulations, but it is what matters to the people who have least to say and to whom least attention is paid.
What follows is how the DWP themselves would like the information relating to these topics presented. I am not commenting, the presentation is indicative of what the DWP considers the necessary immediate steps to weather the storm.
Supporting the most vulnerable with the Cost of Living:
The Chancellor set out further support to protect the most vulnerable in society from rising costs due to inflation. Measures include:
- Maintaining the triple lock policy and uprating state pensions by CPI in 2023/24. This is worth over £870 next year on average.
- In April 2023, working age, disability benefits and the pension credit standard minimum guarantee, will also be uprated by CPI.
- There will be further Cost of Living Payments made in 2023/24 for those on means tested benefits, people claiming disability benefits, and pensioner households. Payment dates are still to be confirmed. For means tested benefits, this will be a total of £900 split into payments through 2023/24, for disability benefits, this will be £150, and for pensioners, this will be £300. In total, these payments are worth £10.5bn in 2023/24.
- To ensure that households will see an increase in their benefits following uprating – the benefit cap will also be increased in line with CPI.
- A further one-year extension of the Local Authority (LA) Household Support Fund from March 2023 to provide £842m of support for the most vulnerable in society. The Devolved Administrations will receive £158 million through the Barnett formula as usual, bringing total spend for the measure to £1 billion.
- Social rented sector rent rises in England will be capped to a maximum level of 7% in 2023-24.
- Homeowners claiming Universal Credit (UC) will benefit from changes to the Support for Mortgage Interest (SMI) scheme, as first announced in June 2022. This includes reducing the SMI qualifying period to 3 months, providing support quicker to ensure homeowners have better protection against repossession and build-up of arrears, and extending eligibility to UC claimants with earnings, providing an incentive for existing SMI claimants to move into work and better support themselves. It will also provide support to in-work homeowners, ensuring they have vital protection against repossession. The Autumn Statement confirms the detail including the timing of this measure – with the change coming into effect from April 2023. The estimated average SMI loan for those on UC is around £5,200 per year from 2023-24 to 2027-28.
Supporting financial resilience in later life for current and future pensioners:
- The State Pension age is legislated to increase over the next 25 years. There is currently a Review of the State Pension age being carried out, which is considering whether the existing timetable remains appropriate. The Secretary of State for Work and Pensions will publish the Government’s Review of the State Pension age in early 2023.The Review will need to carefully balance important factors, including fiscal sustainability, the economic context, the latest life expectancy data and fairness both to pensioners and taxpayers.
Tackling inactivity and supporting people to grow their earnings:
- The Chancellor set out a measure to support more low earning UC claimants to progress in work. From September 2023, more low earning UC claimants will benefit from a new support offer from Jobcentre Plus. They will be required to meet their work coach on a quarterly basis and to undertake activities that will increase their chances of securing more hours or better paid work now or in the future.
- The Chancellor also announced that the Department would carry out a workforce participation review to understand what actions should be taken to address the rise in economic inactivity, which has been primarily driven by people aged over 50 leaving the labour market. The review will conclude in early 2023.
Ensuring Fiscal sustainability and securing value for money for taxpayers:
The Chancellor also announced:
- Further investment into the DWP’s counter fraud teams in 2024/25, recruiting staff to conduct more compliance interviews & investigations, enhanced checking of high-risk claims before they enter payment, and to disrupt and drive out serious and organised crime.
- An increase in staffing of the DWP’s new Targeted Case Review of Universal Credit claims by March 2025 to identify claims at risk of being incorrect, including suspicious claims which entered the system during the height of the pandemic.
- A delay in the moving of ESA claimants not in receipt of Child Tax Credit into UC until April 2028.
- A delay in the planned merger of housing benefit and pension credit.