The ending of the benefits freeze is a welcome move but many Universal Credit recipients will still struggle to make ends meet, Citizens Advice has warned.
The freeze, which was introduced by former Chancellor George Osborne four years ago, has meant the value of benefits has not risen each year in line with inflation.
MPs have now voted to end the freeze from April 2020 and to implement a rise of 1.7% a year for working-age benefits such as Universal Credit and Jobseeker’s Allowance.
But analysis by Citizens Advice suggests that almost four in 10 households that seek debt advice and receive these frozen benefits would still not have enough money to cover their costs by 2024 – even if these rises were to continue in future years.
The figures also show the number of people who are unable to cover their living costs has increased since the benefits freeze began in 2016.
In the first five months of the current financial year, 40% of the people the charity helped with debt who claim income-related benefits didn’t have enough money to cover their living costs – an increase of 25% since the freeze came into effect.
Citizens Advice is calling on the government to increase income-related benefits by the Consumer Prices Index (CPI) plus 2% for four years, and to recalculate Local Housing Allowance, which determines housing benefit for private tenants.
It also argues that changes to benefit levels need to be accompanied by wider reforms to ensure the benefits system as a whole provides people with the right support.
This includes ensuring Universal Credit gives people enough to live on by reviewing areas such as the amount of money retained by working claimants, and deductions for those dealing with debts or repaying advance payments.
Dame Gillian Guy, chief executive of Citizens Advice, said increasing numbers of people simply don’t have enough money to make ends meet.
“While a step in the right direction, increasing benefits by inflation will not go far enough to help solve this problem,” she warned. “The benefits system was created to support people in times of need. The government should show it’s serious about meeting this ambition by properly investing in working-age benefits, and making sure fewer families are left in a downward spiral with no way to pay their bills.”