MPs urge pause to benefit deductions during cost of living crisis

Deductions of people’s benefits should be paused to help households struggling with huge financial pressures during the cost of living crisis, an influential committee of MPs said today.

With inflation set to peak at its highest level for 40 years, the report from the cross-party Work and Pensions Committee highlighted how the deductions from benefits, usually taken to recover money owed for a variety of debts and advances, are pushing some people into hardship and leading them to depend on foodbanks.

The Committee called on the Department for Work and Pensions (DWP) to pause the deductions and restore them gradually only as the rate of inflation reduces, or when benefits have been increased to accurately reflect the rise in prices.

In addition, the Committee recommended the Government increase the benefit cap – which has remained frozen since it was lowered in 2016.

During the inquiry, MPs heard concerns that the current cost of living crisis, caused by rising energy, fuel and food costs, has exposed longer standing problems with the adequacy of the social security system. While measures announced by the Government were broadly welcomed, the report urged the Government to limit the use of one-off payments and prioritise other options, with a regular, predictable income better for households trying to manage a budget.

With the uprating mechanism for benefits falling out of step with spiralling inflation, the Department must work to increase the speed with which changes can be made to legacy benefit and state pension rates. The report concluded that current legacy benefit IT systems are not fit for purpose, with the April rise in benefits based on the inflation rate from seven months earlier.

Sir Stephen Timms, 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.

‘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.’

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