Published On: Fri, Oct 18th, 2019

Universal Credit UK: Poorest families ‘£580 worse-off’ after freeze – will amount rise? | Personal Finance | Finance

Universal Credit and other benefits made headlines this week, ahead of the benefits freeze due to come to an end in April next year. It would see payments rise 1.7 per cent in April – the first increase for five years. However, a think tank has suggested the four-year freeze has left some families £580 per year worse-off. The analysis, drawing on the Office for National Statistics inflation figures for September, notes that working-age benefits would be set to keep pace with rising prices.

However, it said the impact of the benefit freeze on lower income families would continue.

The Foundation said the analysis showed the benefit freeze has reduced the real-terms value of working-age benefits by six percent since 2015.

According to the Resolution Foundation, the average couple with children in the bottom half of the income distribution would be left £580 per year worse-off.

Adam Corlett, Senior Economic Analyst at the Resolution Foundation, said: “Today’s inflation figures have confirmed that working-age benefits received by millions of families are set to rise in line with prices by 1.7 per cent next April. This is their first cash increase in five years.

“But while the benefit freeze is over, its impact is here to stay with a lower income couple with kids £580 a year worse off as a result.

“And because benefits will only keep pace with rising prices, the social security safety net will continue to erode – falling further behind earnings and the state pension.

“With children born today facing the highest risk of poverty in 60 years, it’s time the main parties rethought their approach to welfare, and reprioritised their efforts towards supporting low and middle income families.”

On Wednesday, Department for Work and Pensions (DWP) chiefs did not confirm the rise for all benefits rates next year.

Secretary of State at the Department for Work and Pensions Thérèse Coffey told MPs the DWP is in talks with the Treasury over benefit rates.

However, she added: “Until I get the analysis which is due before the end of the month, then I won’t be in a position to say exactly what we’ll do on every single product line.”

The MP said she could not give a “definite outcome” on the matter.

The state pension amount rises each year, according to the triple lock.

This means it will increase each year by whichever is the highest out of the average percentage growth in wages in Great Britain, the percentage growth in prices in the UK as measured by the Consumer Prices Index (CPI), or 2.5 per cent.

As of April next year, the state pension is set to increase by 3.9 per cent.

Steven Cameron, Pensions Director at Aegon commented: “The State Pension is currently increased by the ‘triple lock’ which is the highest of earnings growth (to July), price inflation (to September) or 2.5 percent a year.

“With the September inflation rate now confirmed as 1.7 percent, state pensions are expected to rise by the higher earnings figure of around four percent.

“While this increase will be welcomed, for those over 75 who are not receiving pensioner credit, it will be partly wiped out when they start having to pay for their £154.50 annual TV licence fee.”

While some pensioners will see their state pension amount rise next year, some who live in certain countries overseas will not.

That’s because the state pension only increases each year if one lives in the European Economic Area (EEA), Gibraltar, Switzerland, and countries that have a social security agreement with the UK – not including Canada or New Zealand.

Are you affected by the benefits freeze? If you’d like to share your story, get in touch by emailing

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