On top of the “biggest ever cash increase in the state pension”, the chancellor also said that he would uprate universal credit and benefits by inflation, with a jump of 10.1 per cent next year.
“I’ve talked a lot about British values of compassion, hard work, dignity, fairness. There is no more British value than to protect and honour those who built the country in which we live. So to support the poorest pensioners I have decided to increase the pension credit by 10.1 per cent,” the chancellor said in his Autumn statement.
He continued: “I can also announce that we will fulfil our pledge to the country to protect the pensions triple lock. In April the state pension will increase in line with inflation, an £870 increase, which represents the biggest increase to the state pension.”
Conservative MPs cheered loudly as Mr Hunt announced that he would be protecting the pensions triple lock.
Announcing his increase of benefits in line with inflation, Mr Hunt said: “Today I also commit to uprate such benefits by inflation with an increase of 10.1 per cent, that is an expensive commitment costing £11bn.
“But it means 10 million working-age families will see a much-needed increase next year.
“On average, a family on universal credit will benefit next year by around £600. And to increase the number of households who can benefit from this decision I will also increase the benefit cap with inflation next year.”
Mr Hunt concluded his statement by saying that this was “a balanced plan for stability, a plan for growth and a plan for public services.”
Shadow chancellor Rachel Reeves responded: “This government has forced our economy into a doom loop where low growth leads to higher taxes, lower investments and squeezed wages, with the running down of public services - all of which hits economic growth again.”
The Office for Budget Responsibility has forecast that more than half a million people would lose their jobs, while living standards will crash as a result of rising prices.
The OBR’s assessment, which was published alongside Mr Hunt’s Autumn statement, said: “Rising prices erode real wages and reduce living standards by 7 per cent in total over the two financial years to 2023-24 (wiping out the previous eight years’ growth), despite over £100bn of additional government support.
“The squeeze on real incomes, rise in interest rates, and fall in house prices all weigh on consumption and investment, tipping the economy into a recession lasting just over a year from the third quarter of 2022, with a peak-to-trough fall in GDP of 2 per cent.
“Unemployment rises by 505,000 from 3.5 per cent to peak at 4.9 per cent in the third quarter of 2024.”