Source · Select Committees · Work and Pensions Committee
Recommendation 14
14
Rejected
Paragraph: 83
Clarify legal position on uprating Universal Credit while maintaining one-off payments for legacy benefits.
Recommendation
It is clear that an uplift of regular working age benefits received would be more beneficial than ad-hoc cost of living support payments as it would better enable households to budget and reduce the chance of a recipient losing out on a major one-off payment. The Government have explained it is not possible to quickly uprate legacy benefits, however it can quickly uprate Universal Credit. We also note this problem will disappear once the transition to Universal Credit is complete. The Government has explained it is not possible to quickly uprate legacy benefits, however it can quickly uprate Universal Credit. We also note this problem will disappear once the transition to Universal Credit is complete. The Government should clarify the legal position as to whether it can uprate Universal Credit and only maintain the one-off payment system for those on legacy benefits. If this can be done, and should further cost of living payments be required next year or in the future, the Government should uprate Universal Credit and only maintain the one-off payment system for those on legacy benefits.
Government Response Summary
The government rejected the recommendation to uprate Universal Credit separately and maintain one-off payments only for legacy benefits, citing the statutory annual review duty and the breach of equal treatment requirements if differentiated.
Paragraph Reference:
83
Government Response
Rejected
HM Government
Rejected
Cost of Living Payments enabled us to quickly target additional support in exceptional circumstances pending the statutory annual review of State pension and benefit rates which comes into effect in April each year. Furthermore, Cost of Living Payments do not count towards the Benefit Cap, and do not have any impact on existing benefit awards. This approach allows households to retain the full value of the payments they receive. With respect to uprating, the Secretary of State has a statutory annual duty under the Social Security Administration Act 1992 to review State Pension and benefit rates. The Act provides for one review each tax year, and there are no plans to seek to amend it . With respect to Universal Credit and the DWP benefits it replaces, the Act provides that these are increased at the discretion of the Secretary of State once he has assessed the increase in prices over the preceding year and has had regard to the national economic situation and any other matters which he considers relevant. Since 2011 the index used for this purpose has been the increase in the Consumer Prices Index in the year to September. These rates were increased by 10.1% in April 2023 in line with prices growth, and from April 2024, subject to Parliamentary approval, they will be increased by 6.7%, also in line with prices growth. While Universal Credit can be uplifted in-year as it was during the Covid-19 pandemic, this was to provide a cushion for those newly entering the working-age benefit system as a result of the exceptional effects of the pandemic. This approach would not have been acceptable in response to cost of living pressures, because those apply to households already in the benefit system as well. Differentiating between UC and the DWP benefits it replaces, by uplifting one and providing a one-off payment for the other, would breach equal treatment requirements since the rates of both are proportional to family size. One- off payments, by contrast, are single amounts designed to ensure money is paid quickly when it is needed pending the longer-term smoothing effects of annual uprating.