Source · Select Committees · Work and Pensions Committee
Recommendation 12
12
Accepted
Introduce an ‘Uprating Guarantee’ for annual, consistent benefit increases from 2025–26.
Recommendation
There remains uncertainty for some benefits each year as to whether they will be uprated. We agree with the assessment of the Secretary of State that it is important that “there is an element of fairness to the consistency” of how uprating decisions are made. From financial year 2025–26, the Government should make an ‘Uprating Guarantee’ to uprate benefits annually with a consistent measure, for example prices. (Paragraph 122) 76 Benefit levels in the U
Government Response Summary
The government did not commit to a new 'Uprating Guarantee', explaining that existing law mandates price-linked increases for certain benefits and, by convention, discretionary benefits are typically increased annually in line with CPI.
Government Response
Accepted
HM Government
Accepted
The Social Security Administration Act 1992 places the Secretary of State under a statutory annual obligation to consider increases in prices and earnings, and then review the rates of State pensions and benefits in light of the relevant increases. In certain cases, rates must increase if the relevant index shows growth. For example, extra-costs disability benefit rates – which are intended to provide a contribution to the costs unavoidably incurred by disabled people – must by law be increased at least in line with prices. However, with respect to benefits linked to labour-market participation, the Secretary of State has discretion as to whether, and how, to uprate them once he has made an assessment of whether these benefits have maintained their value in relation to the increases in prices. In exercising this discretion, the Social Security Administration Act 1992 provides that he may have regard to the national economic situation and any other matters which he considers relevant. 10 Benefit levels in the UK overnment’s response to the Committee’s Second eport In practice, when exercising this discretion, the Secretary of State seeks to strike a balance in the uprating of Universal Credit (and the DWP benefits it replaces) between maintaining work incentives for those who can work, and providing longer-term financial support for those who cannot. By convention, but not legal obligation, these discretionary benefits – like those which must be increased in line with prices, such as PIP – are typically increased annually in line with the increase in prices as measured by the increase in CPI in the year to September.