The government has detailed that for the 2020/21 financial year, benefits will continue to be indexed in line with the Consumer Prices Index (CPI) after being frozen since 2015/16. As it stands, this means that benefits generally will increase by 1.7 percent. On top of these rises to benefit levels, the government also increased pension rates. Basic and new State Pensions will be uprated in line with the “triple lock system”. This system means that the pensions will rise by the highest of the increase in earnings, price inflation (as measured by the CPI) or 2.5 percent. For 2020/21, earnings growth was the highest at 3.9 percent.
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This means that:
The New State Pension (for those reaching State Pension age on or after 6 April 2016) will be £175.20 per week in 2020/21 (up from £168.60 in 2019/20)The Basic State Pension (the core amount in the old State Pension system) will be £134.25 per week in 2020/21 (up from £129.20 in 2019/20).
These rises after four years of freezing are a step in the right direction. However, some organisations are not impressed.
Citizens Advice, the network of 316 independent charities, recently produced a report on the impact of ending the benefits freeze and how the 1.7 percent rise will affect claimants.
According to their research, uprating income-related benefits by the CPI will still leave 38 percent of households with a negative budget by 2024.
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Universal Credit rates are set to rise in April 2020 (Image: GETTY)
Universal Credit is designed to support those who may be struggling (Image: GETTY)
They detail that the way to remedy this is to increase benefits by CPI plus two percent, as well as recalculating the Local Housing Allowance to the thirtieth percentile of local rents.
If this is done, they calculate that the proportion of households with a negative budget would fall to 28 percent by 2024.
Citizens Advice officially called for the government to introduce these changes. They also ask that the government ensure Universal Credit provides enough generally for people to live on.
To do this, they want areas such as the amount of money retained by working claimants and deductions for those faced with debts to be reviewed. These findings were shared by the All Party Parliamentary Group (APPG) on Universal Credit.
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he APPG is a cross-party group which was established for Members of Parliament to discuss and make actions for various Universal Credit issues.
This group feels that Universal Credit does not work as well as it should and they are pushing for it to be simplified.
While it is an informal group, it currently has MPs from Labour, Conservative and the SNP, which suggests that Universal Credit is under the microscope across the political parties.
Using the official decisions and suggested improvements, it is possible to gauge what Universal Credit claimants could receive as income.
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Although it should always be remembered that the official rise is still 1.7 percent, the government has not changed its position on that.
Universal Credit payments also vary based on individual claimants circumstances, meaning income across the board will be difficult to measure.
However, the government does provide details on “standard allowances” which can be used as a base. Currently, the standard allowance is as following:
Single and under 25 – £251.77 per month
Single and 25 or over – £317.82 per month
In a couple and both are under 25 £395.20 each per month
In a couple and either are 25 or over £498.89 each per month
The amount claimants will receive as income may rise with changes to rates (Image: EXPRESS)
Taking into account the upcoming rise of 1.7 percent, claimants could receive the following:
Single and under 25 – £255.97 per month
Single and 25 or over – £323.22 per month
In a couple and both are under 25 £401.91 each per month
In a couple and either are 25 or over £507.37 each per month
As Citizens Advice suggested, the rise should be two percent above CPI for the best outcome. CPI is currently 1.7 percent, so the total rise could be 3.7 percent. This is still just a suggestion, but if the government were to introduce this rate claimants could receive the following:
Single and under 25 – £261.08 per month
Single and 25 or over – £329.57 per month
In a couple and both are under 25 £409.82 each per month
In a couple and either are 25 or over £517.34 each per month
Only time will tell if the 1.7 percent rise will be enough or if additional rises will be needed to truly sustain claimants. The Government will need to keep an eye on Universal Credit moving forward as the rollout has been riddled with issues. There have been reports of claimants struggling to pay for essentials like heating due to low payments and a recent report details that a quarter of recipients are facing problematic levels of debt.