Rishi Sunak refused to rule out cutting benefit payments to fund tax cuts before the next election, despite experts warning that such a move would be “morally bankrupt and economically illiterate”.
The prime minister declined to “speculate” on what would be in Chancellor Jeremy Hunt’s budget in November when asked if he could ensure benefits would rise with inflation.
It came amid a Tory disagreement over whether Hunt would give benefit claimants a real pay cut in order to find money for tax cuts before the election.
Ministers usually increase payments in line with inflation figures last September – which this year could reach 7 per cent.
But the government has not denied the possibility of downsizing the cohort, in anticipation of a lower base rate later this year.
The chancellor faces a difficult statement in the fall of November, with little room to maneuver financially.
Yet at the same time he is under intense pressure from Tory MPs to deliver a pre-election tax cut to voters in next spring’s budget.
And allies of Liz Truss have accused the chancellor of stealing one of her key ideas to “jump-start” economic growth when she was briefly prime minister.
They also claimed that had he embraced the idea in a statement last fall, the Exchequer’s coffers would have been more than £4 billion richer so far.
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Speaking from the G20 summit in India, Sunak said there was a legal process being worked on “every year to improve benefits and a whole host of other things”.
He added: “Those decisions are announced in the autumn statement, and this is completely normal.”
While the Prime Minister sought to “reassure” those struggling with the costs of living, he pointed to additional support already being provided to help pay energy payments and other bills.
“So people have to be reassured that this additional support is there for the most vulnerable in our society at a time I know is difficult and that’s why we have to bring down inflation,” he said.
“That’s why my top five priorities are to halve inflation. This is the best way to help everyone with the cost of living.”
But Helen Barnard, director of policy, research and impact at poverty charity the Trussell Trust, said the idea ministers were considering cutting aid was “terrifying”.
I told The Independent: “Six in 10 people on Universal Credit already cannot afford to eat properly, and with winter coming this will strike fear into the hearts of many.
“Millions are trapped in appalling hardship, with mounting debt and deteriorating physical and mental health.”
Ms Barnard highlighted warnings from health leaders that poverty is fueling the crisis as winter approaches, and said cutting benefits would force millions of people into extreme poverty.
She said any reduction would be “morally bankrupt and economically illiterate.”
Hunt and Sunak have repeatedly said they want to cut taxes, when the economic picture allows.
The economy is still reeling from the after-effects of the pandemic, the cost of living crisis and Ms Truss’ disastrous mini-budget, which led to her being removed from office by fellow Tory MPs.
Ministers could try to use the widely expected drop in inflation to justify their decision to cut interest rates.
A government spokesman said: “In order to protect the most vulnerable groups from the impact of high inflation, the government has increased subsidies by more than 10 percent this year.
“As is the usual process, the Secretary of State will conduct his statutory annual review of state benefits and pensions in the autumn, using the latest data available.”