MPs argue today that automatic repayments to the government and others owing by benefit recipients should be placed on hold in order to assist households coping with enormous financial strains amid the cost of living crisis.
The study from the cross-party Work and Pensions Committee reveals how deductions from benefits, often made to collect money owing for a range of loans and advances, are forcing some individuals into poverty and forcing them to rely on foodbanks.
The Committee urged the Department of Work and Pensions (DWP) to suspend the deductions and progressively reinstate them only when the rate of inflation declines or when benefits have been adjusted to correctly reflect the rise in prices.
In addition, the Committee proposes that the Government evaluate and raise the benefit cap, which has remained unchanged since 2016.
During the inquiry, Committee MPs also heard concerns that the present cost of living emergency, brought on by rising energy, gasoline, and food prices, has highlighted longer-standing deficiencies in the social security system.
While the Government’s actions have been generally well-received, the study recommends the Government minimise the use of one-off payments and prioritise other choices, with regular, predictable income being preferable for budgeting households.
As a result of the uprating process for benefits falling out of sync with spiralling inflation, the DWP is urged to raise the speed at which legacy benefit and state pension rates can be modified.
The analysis indicates that the present legacy benefit IT systems are not fit for purpose, with the April increase in benefits predicated on the previous seven-month inflation rate.
Stephen Timms MP, Chair of the Work and Pensions Committee, said: “Inflation is at a 40 year high, with spiralling energy, food and fuel prices adding up to a cost of living crisis not seen for a generation and a bleak outlook for many families.
“Deductions by DWP from benefits are contributing to the hardship and the Government should give those struggling some much needed breathing space by following its own advice to other creditors and pausing repayments until the threat of inflation recedes.
“Ministers also need to urgently review and uprate the benefit cap. The decision to exempt cost of living payments from the cap suggests the Government knows it is set too low to effectively cover households’ now rapidly rising costs.
“A properly functioning social security safety net should be agile enough to respond to worsening economic conditions, but the high levels of inflation have laid bare the dysfunctional nature of parts of the system – not least that any increase in benefits is already seven months out of date when it takes effect.
“While the Government’s emergency measures and one-off payments are welcome, there is no substitute for regular, predictable income when it comes to households trying to get by.
“Lump sum payments may not be needed if uprating was not so impotent in the face of rising prices.
“The Government must urgently increase the speed with which the DWP’s systems can make changes to benefit and pension rates to make sure the social security safety net lives up to its name for the most vulnerable people in our society.”