Inflation Link On Benefits Could Go

Inflation Link On Benefits Could Go.

According to government sources, ministers are considering alternatives to an inflation-linked rise to benefits.  From April 2012, benefits are due to rise by 5.2% in line with September’s inflation figures and the government is worried about the cost  of such increases and the impact on public opinion given the current low wage increases.

Norman Smith, the BBC News channel's chief political correspondent believes that one possible option could be raising benefits in line with the average inflation rate for the year, instead of the September figure.  It is also reported that Chancellor George Osborne has asked officials for alternative options, including a rise in line with average earnings growth of about 2.5% or freezing some payments.

The Institute of Fiscal Studies has calculated that the 5.2% September inflation figure will add £1.8bn to welfare spending next year.  It said freezing all benefits and pensions would save about £10bn and linking benefits increases to wage rises would save £5bn.