The UK government says it will no longer raise welfare benefits in line with the inflation rate in a move that would outrage millions of benefit claimants, unions and charities.
Chancellor George Osborne said the government will only increase payments to benefit claimants by 4.5 percent in the coming fiscal year, which begins in April.
That would create a huge gap between inflation figure, which hit a record high of 5.2 percent in September, and the rise in benefits.
The Treasury regulations rule that September inflation should be the basis for increasing welfare benefits. Yet, Osborne is to use the average inflation rate of the six months to September as the basis for his calculations.
The move is meant to lower an estimated £1.8 billion cost of applying the 5.2 percent increase rate to benefits.
However, it would create chaos as the government has already triggered public outrage by shifting to the Consumer Price Index (CPI) for calculating the rate of inflation while it formerly used a higher measure of inflation — Retail Price Index – for its calculations.
Applying the 4.5 percent rate to benefits will cut the disability and employment benefits of 5.7 million Britons by an annual £50 to £100 while it would lighten the government’s benefits burden by an estimated £1 billion.