Reeves ‘must set minimum benefits payments’

Rachel Reeves must commit herself to a minimum level of benefit payments in the budget to ensure that the poorest can afford basic essentials.
The Joseph Rowntree Foundation, an economic think tank focused on improving the livelihoods of low-income families, said its research had indicated that in five years’ time the living standards of the poorest households in the UK would still be 0.8 per cent lower than they were in 2019.
Middle-income and rich households are set to see their disposable incomes rise over the same period, the foundation said, so inequality could be exacerbated without government action.
Researchers said that single parents and working-age households in receipt of benefits had fared the worst during the cost of living crisis, with the former group’s disposable income £690 lower this October compared with the same month in 2019 and the latter’s down £700.
The foundation said: “The pandemic and cost of living crisis have cost the country nearly half a decade in lost living standards.” Average household incomes would not reach their 2020 levels until the end of this decade, it predicted.
The think tank urged the chancellor to introduce a “minimum floor” for universal credit payments, in effect creating a universal basic income.
Households in receipt of universal credit are poised to receive a 1.7 per cent increase in their welfare payments next April. Pensioners, however, will benefit from an above-inflation increase to their pensions of more than £400 next year.
The foundation highlighted that rising housing costs caused by steeper mortgage payments would constrain average real income growth. As of this month, mortgage payments were £1,300 higher than they were five years ago, it said, adding that this figure was expected to reach £1,800 by 2029.
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By 2029 working-age households on benefits would be around £1,000 worse off compared with 2019, the think tank said, thanks to benefit increases trailing behind housing cost inflation. Local housing allowance, the rate which sets housing benefit entitlement for private renters, should be tied to the prevailing level of private rent in the tenant’s surrounding area, it suggested.
The foundation said: “Our argument in this paper is simple: the pressures on the public finances are real, but the most serious inheritance for the new government is the dire state of living standards right across society.”
The Treasury said: “We will provide long-term security for working people, and ensure low-income families get the support they need.”