Universal Credit could face real-terms cuts as Rishi Sunak refuses to guarantee it will rise with inflation

Rishi Sunak has refused to guarantee benefits will not be cut in real terms next year as his Chancellor Jeremy Hunt tries to find money for tax cuts demanded by Conservative MPs.

The Prime Minister declined to confirm that benefits including Universal Credit would rise in line with inflation as ministers consider increasing welfare at a lesser rate with the Treasury facing severe financial constraints.

Asked to confirm benefits will rise with inflation, he insisted he would not “speculate on what may or may not be in the Autumn Statement” while insisting the vulnerable should be “reassured” by Government help with energy bills, £900 cost of living payments and increases to the state pension.

Those on benefits including Universal Credit would expect to receive around a 7 per cent increase in payments in April 2024 if the Government uprates them in line with September’s inflation figures.

But the Chancellor is understood to be considering imposing below-inflation uprating as he grapples with the challenge of having little room for manoeuvre when it comes to making any spending pledges ahead of next year’s election.

Ministers could use the projected fall in inflation – expected over the coming year – as justification for a lower rise in welfare payments.

Pensioners however are expected to get an 8 per cent boost in state payments under the controversial “triple lock” policy.

Liz Truss faced a major Tory rebellion when as prime minister last year she considered uprating benefits according to wage growth figures, rather than inflation, which would have amounted to a real-terms cut.

Asked at the G20 summit in New Delhi whether he could guarantee that benefits would rise with inflation next year, Mr Sunak said: “Now, I know this time of year people always like to speculate about what may or may not be in the Autumn Statement, but there is an annual statutory process, a legal process that we work through every year to do benefits, operating in a whole host of other things. 

“And those decisions are announced at the Autumn Statement. That’s entirely normal. 

“But for people who are in that situation today, who I know are struggling with the cost of living, I just want to reassure you about the support the government is putting in place. 

“First and foremost with energy bills where we have provided around £1,500 of support to every family in the UK, about half of their typical energy bill. 

“But for those on benefits, specific extra support to help with a cost of living of £900 that’s coming in separate payments to help them with day-to-day bills. 

“Also those on pensions will receive extra cash alongside their winter fuel payment. 

“So people should be reassured that that extra support is there for the most vulnerable in our society at a time which I know is difficult and that’s why we have to bring inflation down. 

“That’s why the first of my five priorities is to halve inflation. 

“That is the best way to help everyone with the cost of living.”