Cost of living crisis: Northern Ireland’s concerns over Liz Truss proposal to avoid inflationary increase for benefits

Liz Truss yesterday refused to say if benefits will rise in line with prices, as she faces questions over how to pay for her government’s tax-cutting plans.

Her predecessor, Boris Johnson, pledged benefits would rise with inflation. Asked whether she would maintain this commitment, the prime minister told the BBC the government had to be “fiscally responsible” and bring debt down.

Ms Truss is instead considering a raise in line with the far lower figure of earnings, but said she would not be sacking Ms Mordaunt for publicly stating her firm stance.

While facing open revolt from some Tory MPs on the proposal, in Northern Ireland yesterday, the SDLP, Alliance Party and People Before Profit also expressed concern.

Kevin Higgins, Head of Policy at Advice NI, which advises people on debt and benefits, responded that it is “a difficult time” for everyone across Northern Ireland. “But is it a terrible time for those on the lowest incomes - both in and out of work,” he added.

He said such people have endured a decade of austerity. “But now they are finding it impossible to cope with average inflation running at 10% but as high as 30% for many essential food items such as meat, dairy, bread and cereals – not to mention the energy bill price hikes.”

There are a number of things that need to happen, he said. The UK Government needs to commit to social security benefit uprating in line with inflation, the Executive needs to be restored to agree a budget and support such as the £400 Energy Bill Support must be delivered quickly. He also called for a pause on benefit deductions and sanctions and investment in emergency energy support schemes such as those run by Derry City & Strabane District Council.

Ulster University Economist Esmond Birnie said alternative options open to the government instead of avoiding inflationary increases on benefits could include postponing proposed tax cuts such as the reduction in Stamp Duty. He added that some extra revenue could also be earned by extending or widening windfall taxes.

Cuts in UK spending on health, welfare and defence are not practical, he said, but could be feasible for local government, transport and justice. However this could have “a negative consequence for an already very challenged block grant for NI’s devolved departments” he added.

SDLP leader Colum Eastwood says the UK government cannot allow a “real-terms cut to welfare payments during a cost of living emergency”.

“Too many families across the North are already living in poverty and if this government goes ahead with decisions like this the situation is going to get much, much worse,” he said.

“I have written to the Chancellor Kwasi Kwarteng outlining a number of proposals including increasing welfare payments in line with inflation, pausing social security debt collection, ending the two-child limit on Universal Credit and Child Tax Credits and reinstating the £20 weekly cut that has left so many families worse off.”

Meanwhile, People Before Profit MLA Gerry Carroll called on Stormont’s communities minister to suspend government debt recovery for those on benefits.

Mr Carroll said: “Government debt recovery is piling further hardship on people who are already struggling to make ends meet.”

Alliance MLA Kellie Armstrong has written to Minister for Work and Pensions Chloe Smith to seek clarification on the proposals.

“The annual benefits increase takes effect each April, based on the Consumer Price Index’s rate of inflation,” she said.

“The previous increase was 3.1% and the UK government has said previously that rate would be used on an annual basis. Therefore benefits would need to be increased in line with inflation, which is estimated around 9% .”

If the government takes a different approach to predecessors then money will be taken from the lowest incomes while allowing higher bonuses to bankers, she said, adding: “That would be an appalling move in this day and age.”