By Ben Kerrigan-
Liz Truss has refused to announce plans to raise benefits in line with prices, as she faces questions over how to pay for her government’s tax-cutting plans.
Her refusal runs against the grain of common sense because higher inflation weakens the value of money in every practical sense.
The value of money exists in the context of prices and affordability, which makes it make sense to raise benefits in line with inflation.
Truss’s rejection of this common sense idea lacks any rationality, except the obvious need to limit the funds going out from the government to jobseekers. Ms Truss can argue that lazy people on benefits should not be compensated by rising inflation, but be grateful for the fact the Uk has a benefit system that cares for its needy population.
The weakness of this view lies in the reality that not all jobseekers are lazy. Some are actively seeking work, and pensioners for example have already paid their dues and deserve to have their money aligned with inflation.
In response to whether the prime minister would maintain the promise made by her predecessor, Boris Johnson, the prime minister told the BBC the government had to be “fiscally responsible” and bring debt down.
However, cabinet minister Penny Mordaunt said it “makes sense” to increase benefits in line with inflation.
“We want to make sure that people are looked after and that people can pay their bills. We are not about trying to help people with one hand and take away with another,” the Commons leader told Times Radio.
Ms Truss said no decision on benefits had been made yet, adding that she looks forward to having those discussions.
Certain benefits, including disability benefits and carer’s allowance, must increase in line with inflation by law.
But for working-age benefits like universal credit no decision has yet been made on whether a rise will be linked to prices or wages.
Ms Truss insisted that the government could have laid the groundwork better for the measure.
She said the government was listening and does “reflect on where we could have done things better”.
However she told Radio 4’s Today programme scrapping the top income tax rate had not been a “core part” of her economic growth package.
The PM is facing opposition from some Tory MPs over how the government will pay for its growth package.
Chancellor Kwasi Kwarteng’s tax-cutting mini-budget on 23 September saw the pound’s value plummet, borrowing costs soar, and the Bank of
In a subsequent interview, Ms Truss was asked several times whether she trusted her chancellor following the U-turn.
She evaded the question, saying: “I work very, very closely with my chancellor, we’re very focused on getting the economy growing.” “I know the plan put forward only 10 days ago has caused a little turbulence, I get it..”
Asked about whether she would commit to increasing benefits in line with inflation, Ms Truss told the BBC: “We are going to have to make decisions about how we bring back down debt as a proportion of GDP in the medium term.”
She added that she was “very committed to supporting the most vulnerable”, including providing an extra £1,200 to the poorest households.
“So we have to look at these issues in the round. We have to be fiscally responsible.”
In May this year, then-chancellor Rishi Sunak said benefits would be uprated by this September’s Consumer Prices Index measure of inflation, which is currently 9.9%, subject to a review by the work and pensions secretary.
Senior Conservatives, including former ministers Michael Gove and Esther McVey, have called for benefits to rise in line with inflation.
Mel Stride, who chairs the Commons Treasury Committee, said he “would have to think long and hard” about whether to vote for uprating benefits in line with wages instead because of the “strong real-terms squeeze on those benefits already”.
Tory MP Lee Anderson said it “does not seem fair” for those on benefits to get “inflation-busting” increases of as much as 10%, while public and private sector workers are offered pay rises of 2-4%.
Katie Schmuecker, from the Joseph Rowntree Foundation, said: “Liz Truss felt able to give that assurance to pensioners, now she must be clear that she won’t target cuts at those on the lowest incomes who have been struggling for months to feed their families, cook hot food and heat their homes.”
Labour’s shadow chancellor Rachel Reeves also criticised the lack of commitment to the move, saying: “The idea that the government can afford to give tax cuts to the wealthiest, but not uprate benefits in line with inflation, I think is grotesque.”
In response to a question about whether she plans to maintain this commitment, the prime minister told the BBC the government had to be “fiscally responsible” and bring debt down.
Cabinet minister Penny Mordaunt said it “makes sense” to increase benefits in line with inflation.
“We want to make sure that people are looked after and that people can pay their bills. We are not about trying to help people with one hand and take away with another,” the Commons leader told Times Radio.
But Ms Truss told broadcasters no decision on benefits had been made yet , adding that she looks forward to having those discussions.
When Secretary Robert Buckland was asked by BBC Newsnight if he wanted to see benefits rise in line with inflation and said: “Every Conservative government that I’ve been part of has maintained the safety net, and I’m sure this one will do the same.”
Benefits including disability benefits and carer’s allowance must increase in line with inflation by law.
Speaking in her first BBC interview since the U-turn on plans to scrap the 45p rate of tax for higher earners, Ms Truss reiterated that the government could have laid the groundwork better for the measure.
She said the government was listening and does “reflect on where we could have done things better”.
However she told Radio 4’s Today programme scrapping the top income tax rate had not been a “core part” of her economic growth package.
The interview came before the chancellor confirmed he would bring forward his medium-term fiscal plan, which will outline how the government plans to cut the UK’s debt, “shortly” rather than at the end of November.
The PM is facing opposition from some Tory MPs over how the government will pay for its growth package.
Chancellor Kwasi Kwarteng’s tax-cutting mini-budget on 23 September saw the pound’s value plummet, borrowing costs soar, and the Bank of England bail out pension funds.
In a later interview, Ms Truss was asked several times whether she trusted her chancellor following the U-turn.
Sidestepping the question, she said: “I work very, very closely with my chancellor, we’re very focused on getting the economy growing.””I know the plan put forward only 10 days ago has caused a little turbulence, I get it..”
Asked about whether she would commit to increasing benefits in line with inflation, Ms Truss told the BBC: “We are going to have to make decisions about how we bring back down debt as a proportion of GDP in the medium term.”
She added that she was “very committed to supporting the most vulnerable”, including providing an extra £1,200 to the poorest households.
“So we have to look at these issues in the round. We have to be fiscally responsible.”
In May this year, then-chancellor Rishi Sunak said benefits would be uprated by this September’s Consumer Prices Index measure of inflation, which is currently 9.9%, subject to a review by the work and pensions secretary.
Failing to keep benefits in line with rising prices would leave some of the poorest households facing a real-terms cut in their incomes.
Senior Conservatives, including former ministers Michael Gove and Esther McVey, have called for benefits to rise in line with inflation.
Mel Stride, who chairs the Commons Treasury Committee, said he “would have to think long and hard” about whether to vote for uprating benefits in line with wages instead because of the “strong real-terms squeeze on those benefits already”.