Rishi Sunak put under early pressure to keep promise on raising benefits

Britain's new Prime Minister Rishi Sunak waves in front of Number 10 Downing Street, in London, Britain, October 25, 2022. REUTERS/Hannah McKay
New PM Rishi Sunak has been urged to stick to his promise made as chancellor to increase benefits in line with inflation. (Reuters)

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Rishi Sunak has been put under immediate pressure to honour his pledge to increase benefits in line with inflation as he begins his premiership amid the worsening cost-of-living crisis.

Sunak won the latest Tory leadership contest on Monday after Liz Truss was forced to resign following a disastrous economic approach which threw the financial markets into turmoil.

In May this year, while serving as chancellor under Boris Johnson, the prime minister promised that benefits would increase at the same rate as inflation, which currently stands at 10.1% – a pledge that was subsequently thrown into doubt by Truss.

Stephen Timms, chair of the Work and Pensions Committee, has now urged the PM to honour his commitment.

"He made the promise... and I think he should be held to that.

"Unless he's going to tell us that his party made such a mess of the economy in the intervening couple of months that his promise can no longer keep," Timms told Yahoo News UK.

"[Benefits] really are at a very, very low level.

"And, that's why there are hundreds of thousands of people having to go to food banks.

"In 2010, there were 60,000 food bank parcels given out by Trussell Trust food banks.

"Last year, it was two and a half million... we can't surely we can't carry on like this, we have to recognise there is a real problem here."

The cost of living is soaring in the UK (Yahoo News UK/Flourish)
The cost of living is soaring in the UK (Yahoo News UK/Flourish)

Before her resignation, Truss was understood to be considering raising benefits in line with earnings rather than with inflation, which would mean an increase of 5.5% instead of 10.1%.

Campaigners and think tanks have warned this would throw vulnerable families into destitution.

Analysis by the Resolution Foundation think tank found a working couple on universal credit with two children would be left £752 a year worse off if benefits were to rise with earnings instead of inflation.

Benefit claimants face a significant hit to their incomes. (Resolution Foundation)

Sunak told MPs in May: "I can reassure the House that next year, subject to the secretary of state’s review, benefits will be uprated by this September’s CPI,"

"Which, on current forecasts, is likely to be significantly higher than the forecast inflation rate for next year."

As chancellor Sunak cut universal credit by over a £1,000 a year by cancelling a £20 a week uplift he introduced during the pandemic - a move which was condemned by campaigners and a number of senior Tory MPs.

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Rishi Sunak makes a speech outside 10 Downing Street, London, after meeting King Charles III and accepting his invitation to become Prime Minister and form a new government. Picture date: Tuesday October 25, 2022.
Rishi Sunak makes his first speech as PM outside 10 Downing Street. (PA)

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The PM warned in his first speech in office on Tuesday morning that "difficult decisions" lay ahead.

"There are always limits, more so now than ever," he said outside Downing Street.

"But I promise you this – I will bring that same compassion to the challenges we face today.”

New chancellor Jeremy Hunt is set to announce a fiscal plan on 31 October, in which he has warned of "decisions of eye-watering difficulty" on tax and spending.

"I don't think we're talking about austerity in the way we had it in 2010," Hunt said.

"But we're going to have to take tough decisions on both spending and tax."

He has pledged that any changes will protect the UK's most vulnerable.

"This government will prioritise help for the most vulnerable while delivering wider economic stability and driving long-term growth that will help everyone," Hunt said.

Watch: Everything you need to know about chancellor Jeremy Hunt's emergency statement