The government has refused to commit to ending its freeze on benefits despite a promise to turn the page on a decade of austerity.
The work and pensions secretary, Thérèse Coffey, said she could not give a definitive answer about whether the freeze on most working-age benefits and tax credits would continue beyond its initial four-year term.
Imposed in 2015 by chancellor George Osborne, the benefit freeze was planned to last until the end of the 2019-20 financial year. However, Coffey said talks were ongoing about what the government would do next and she left the door open for a possible extension.
Answering questions from MPs on the Commons work and pensions committee, she said: “I don’t think anybody should make any assumptions by default, but we’re looking very carefully right now on what we can do on benefits going forward from 2020. I can’t give you a definitive outcome on what we will do.”
Inflation figures published earlier on Wednesday indicated that benefits could rise by 1.7% from April if the freeze is lifted. The Office for National Statistics (ONS) said inflation remained unchanged in September, with the consumer price index (CPI) holding steady at 1.7%.
The inflation reading for September is used by the government to uprate the value of benefit payments each year, as well as state pensions and business rates.
The Resolution Foundation thintkank said the welfare freeze had cut the value of benefits by 6% in real terms since 2015, leaving the average poor couple with children £580 a year worse off.
It said the social security safety net was continuing to be eroded as wages and pensions rose by more than double the rate of benefits.
The state pension is expected to rise by 3.9% from next year, more than double the rate of inflation, as a result of the government’s pensions triple lock. State pensions are uprated each year by whichever is highest out of September’s inflation rate, wage growth over the year to August or 2.5%.
Adam Corlett, a senior economic analyst at the Resolution Foundation, said: “While the benefit freeze is over, its impact is here to stay. With children born today facing the highest risk of poverty in 60 years, it’s time the main parties rethought their approach to welfare and reprioritised their efforts towards supporting low- and middle-income families.”
Accountants said the latest inflation reading would mean a rise in business rate costs worth a total £536m next year, hitting a retail sector already blighted by tough trading conditions on the high street.
Alex Probyn, the UK president of expert services at Altus Group, a property consulting firm, said: “Business want and expect the chancellor to deliver a pro-business autumn budget amid these uncertain times and Sajid Javid could do that in part by being the first chancellor in history to scrap the inflationary rise next year.”