Millions of Britons claiming Universal Credit are facing what amounts to a significant real-terms benefits cut, with rates set to remain frozen until at least April 2026, according to government documents obtained by The Independent.
The Department for Work and Pensions (DWP) has confirmed it will maintain current payment levels for another two years, despite ongoing inflation pressures that continue to squeeze household budgets across the country.
The Hidden Benefits Freeze
While not officially termed a 'freeze', the decision to keep Universal Credit payments static while prices continue to rise effectively creates the same outcome for claimants. This comes after the government increased benefits by 6.7% last April, following the previous year's 10.1% rise.
Experts warn that maintaining current rates while inflation persists could leave vulnerable families substantially worse off in real terms, with some households potentially losing thousands of pounds in purchasing power over the two-year period.
Political Battle Lines Drawn
The revelation has sparked immediate political controversy, with Labour accusing the government of planning 'another savage real-terms cut to support for working people.'
Shadow Work and Pensions Secretary Liz Kendall condemned the move, stating: 'This is the absolute opposite of what we need... It will leave millions of people worse off and make it harder for them to get into work.'
The Conservative government, however, defends its position, pointing to last year's significant increases and emphasising the need for fiscal responsibility.
Impact on Household Finances
Analysis suggests the decision could have severe consequences for:
- Low-income families relying on Universal Credit
- Disabled claimants and carers
- Those unable to work due to illness or disability
- Working households struggling with rising costs
The timing is particularly concerning given that inflation, while falling from previous highs, remains above the Bank of England's 2% target and continues to outpace wage growth for many workers.
What Happens Next?
The next benefits uprating decision will come after the release of September's inflation figures, which traditionally determine the following April's benefit increases. However, with the current parliament ending no later than January 2025, the final decision may fall to the next government.
This places Universal Credit rates squarely in the middle of the upcoming general election battle, with both major parties likely to face pressure to clarify their positions on welfare support amid the ongoing cost of living crisis.
