Inflation

(asked on 21st October 2021) - View Source

Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, what assessment her Department has made of the potential impact of the rate of inflation as of 21 October 2021 on child poverty.


Answered by
David Rutley Portrait
David Rutley
Parliamentary Under-Secretary (Foreign, Commonwealth and Development Office)
This question was answered on 29th October 2021

No such assessments have been made of the effect of the rate of inflation as of 21 October 2021 on child poverty.

However, DWP Secretary of State completes an annual review of most benefit rates for people below State Pension age to determine whether they have retained their value in relation to inflation. Where prices have increased relative to the value of those benefits, the Secretary of State will increase certain disability and carers’ benefits – such as Personal Independence Payments and Carer’s Allowance – at least in line with that increase. She may also decide to increase other benefits, such as the Universal Credit Standard Allowance. That decision is discretionary. The up-rating review is conducted in the Autumn of each year, with the outcome announced in November and the new rates implemented the following April.

We understand that with inflation rising, some people will be concerned about the cost of living. That is why this government is continuing to take action to support living standards by increasing the National Living Wage to £9.50 effective from April 1st 2022.

We have also announced a reduction in the taper rate in Universal Credit from 63% to 55% in the coming weeks, meaning Universal Credit claimants will be able to keep more of their earnings and announced that all work allowances will be increased by £500 per year, meaning many claimants will be able to earn over £550 each month before their benefits begin to be scaled down. These two measures mean 1.9m households will keep, on average, around an extra £1,000 a year.

Children living in workless households were around 5 times more likely to be in absolute poverty in 2019/20 than those where all adults work (before housing costs). That is why, through our Plan for Jobs, we are targeting tailored support schemes of people of all ages to help them prepare for, get into, and progress in work. Following the Chancellor’s extension and expansion announcement last month our Plan for Jobs interventions will support more than two million people.

In April this year we also increased the value of Healthy Start Food Vouchers from £3.10 to £4.25, helping eligible low-income households buy basic foods like milk, fruit and vitamins. We are also investing up to £221m in the Holiday Activities and Food programme, which has been expanded to every Local Authority across England. Participating children are benefitting from a range of support, including healthy and nutritious meals as well as fun and engaging activities covering the Easter, summer and Christmas holidays in 2021.

However, we recognise that some people may require extra support over the winter as we enter the final stages of recovery, which is why vulnerable households across the country will now be able to access a new £500 million support fund to help them with essentials. The Household Support Fund will provide £421 million to help vulnerable people in England. The Barnett Formula will apply in the usual way, with the devolved administrations receiving almost £80 million (£41m for the Scottish Government, £25m for the Welsh Government and £14m for the NI Executive), for a total of £500 million.

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