Ministers speak-out against real terms benefit cuts

The discussion on what should happen with benefits has become a contentious topic during the Conservative Party Conference. Following the announcement of plans to reverse the planned abolition of the 45p rate of income tax, the decision on benefit levels now looks like the next political show-down for the government.

With the government under market pressure to spell-out how it will reduce medium term borrowing, not least in the light of its recently announced tax cuts, the prime minister yesterday refused to rule out a real term cut in benefit payments.

However, a growing number of Cabinet ministers have expressed their concerns with the prospect.

Ministers including Penny Mordaunt, leader of the Commons, Robert Buckland, the Wales secretary and Chloe Smith, the work and pensions secretary have said Universal Credit payments must increase in line with CPI inflation.

Mordaunt publicly opposed the prospect of benefits cuts, saying, “I have always supported, whether it’s pensions, whether it’s our welfare system, keeping pace with inflation. It makes sense to do so. That’s what I voted for before and so have a lot of my colleagues.”

One of the main architects of the universal credit system, Iain Duncan Smith, told the BBC: “Do the right thing for those who are poorest.”

“The money you give into this area to deal with the worst off will go straight back into the economy, so that will help growth, ironically, at a time when we need growth rather than recession.”

Chloe Smith, whose role includes reviewing the allocated benefit sum, told the conference:

“We do understand that these are very anxious times for people, we know that people are struggling with some of the costs that are rising. That’s why protecting the most vulnerable is a vital priority for me and to this government.”

Chancellor Kwasi Kwarteng, who previously declined to comment on benefits at all, also hinted that he was not in favour of the cuts, saying it is important to live in a “humane society” and be “compassionate”.

The Chancellor said at a Conservative Party Conference fringe event he was “not going to get drawn into a debate about what we are going to do on benefits”, but said ministers must look after the most vulnerable.

However, Suella Braverman, the home secretary, said that Britain spent too much on welfare and called for “a bit more stick” to get people back to work as she criticised “benefit-street culture”.

According to data from the Joseph Rowntree Foundation, focusing on Universal Credit alone, around 2.2m people receiving the benefit (38%) are working and a further 2.1m people(37%) are not expected to work, because they’re too unwell (including poor mental health), disabled, caring for someone who is sick/disabled or a child under 3.

Legislation says that annually the government must consider raising benefits in line with inflation, though does not have to do this, but it is usual convention. In May this year, then-chancellor Rishi Sunak said benefits would be up-rated by this September’s Consumer Prices Index measure of inflation.

Speaking to the ‘Today’ programme, former prime minister Gordon Brown expressed his disapproval of cutting benefits.

“Even contemplating breaking the promise to link benefits to prices would mean the biggest single cut in real terms of benefits in living memory”.

“It would mean adults with two children would be about £40 per week worse off in April than in last October”.

“It’s divisive. We are not in this together anymore. It’s anti-work because 40% of those who will suffer are people on low pay but in work. It’s anti-family because 5 million children would be in poverty, and I think most of all it’s immoral. It’s asking the poor to bear the burden of the crisis we face in this country for the mistakes other people have made”.

Labour’s shadow chancellor Rachel Reeves said: “The idea that the government can afford to give tax cuts to the wealthiest, but not up-rate benefits in line with inflation, I think is grotesque.”

The prime minister has been so far noncommittal to what decision will be made, saying, “What we are doing is looking at these issues very carefully and that is an announcement that will be made in due course”.