U.K.’s Unemployed Face Biggest Drop in Benefits in 50 Years

(Bloomberg) --

Britain’s unemployed face a further blow on Monday when the value of their welfare benefits is set to fall the most in half a century, according to new research. 

Analysis by the Joseph Rowntree Foundation shows the decline comes with the real value of out-of-work benefits already at historically low levels because the Treasury froze payouts or increased them by less than the rate of inflation for much of the past decade. 

The findings published on Sunday will pile further pressure on Chancellor of the Exchequer Rishi Sunak, who decided to exclude the out-of-work population from his recent aid package to help people struggling with the cost of living crisis. 

A 3.1% increase in jobless benefits that comes into effect tomorrow is based on inflation in September last year. That’s far below 7.7% that prices are likely to rise this month -- with the risk that inflation will accellerate further this year.

The anti-poverty campaign group said the real-terms decline this year is the largest since 1972 and risks pulling 600,000 people into poverty, a quarter of them children. Claimants will have to wait at least another year for the value of benefits to catch up with prices. 

Peter Matejic, deputy director for evidence and impact at JRF, said it’s “difficult to comprehend” Sunak’s decision not to lift benefits in line with inflation. He accused the government of hitting the poorest at the worst possible moment. 

“A decade of cuts and freezes to benefits have left many people in our society in increasingly desperate situations, struggling to afford food, energy and basic hygiene products,” he said. “Without urgent action from the government, the stark reality is that the situation could get much worse.” 

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