Back in July, I told a panel on social security at the Social Liberal Forum conference that in the wake of Brexit, a benefits freeze for four years, which was never a good idea, was entirely inappropriate and we should be opposing it loudly.
Analysis from the Institute of Fiscal Studies confirms that Brexit is going to hit those on benefits and low incomes particularly hard:
Normally many of those on the lowest incomes would be at least partially protected from the impact of higher prices by the rules that govern the annual uprating of benefits and tax credits. By default, benefit and tax credit rates are (with some exceptions, most notably the state pension) increased each April in line with the annual CPI inflation rate of the previous September – higher prices lead to higher benefit rates (albeit with a lag). However, in the July 2015 Budget the Government announced that, as part of its attempt to cut annual social security spending by £12 billion, most working-age benefit and tax credit rates would be frozen in cash terms until March 2020. This policy represented a significant takeaway from a large number of working age households. But it also represented a shifting of risk from the Government to benefit recipients. Previously, higher inflation was a risk to the public finances, increasing cash spending on benefits. Now the risk is borne by low-income households: unless policy changes higher inflation will reduce their real incomes.
I am glad to see that our shadow Chancellor, Susan Kramer, has now said that the Government must reverse its unfair benefits freeze plans:
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