Chancellor Rishi Sunak was advised that he could not raise benefit payments to keep pace with spiralling inflation because of the limitations of ageing government IT systems, reports have claimed.
Last month, the Department for Work and Pensions increased payments across a range of benefits by 3.1%. Included in the raise was the State Pension and Universal Credit, as well as the six so-called legacy benefits it is replacing: Income Support; Income-Based Jobseeker's Allowance; Income-Related Employment and Support Allowance; Working Tax Credit; Child Tax Credit; and Housing Benefit.
Given that the latest ONS figures show consumer prices are currently rising at an annual rate of 7% – the highest in 30 years – even with last month’s increase, benefit recipients will still see their payments decline in real terms.
According to a story in The Times, the chancellor discussed the possibility of raising benefits further still, in order to keep up with inflation. However, the article claims that he was told by officials that doing so for the six legacy benefits was not possible – because of the limitations of an IT system dating from the 1980s, which can only process one increase annually: at the start of the financial year, in April.
The newspaper cited a Whitehall source as saying: "The message came back that you could only do it once a year and this was not the time of year that you could do it. The system was simply not built to be flexible.”
Unlike the outgoing benefits, Universal Credit runs on a much more modern digital system, that allows for benefits to be increased quicker and more flexibly, sources reportedly told The Times.
This echoes statements made by the Department for Work and Pensions, as part of its the announcement last week that it was resuming the migration of legacy benefit claimants to Universal Credit – having paused this process during the pandemic.
“The six benefits being replaced all have complex and inefficient systems based on ageing, inflexible IT,” it said. “Universal Credit uses a modern, digital system which stood up to the test of Covid-19 where it quickly ensured three million new claimants were protected from the financial impact of the pandemic.”
In a statement issued in response to The Times story, a departmental spokesperson added: “We are fully transitioning to a modern benefit suited to the 21st century. Universal Credit makes it easier for people to claim support they are entitled to, is more generous overall than the old benefits, and it successfully met the demands of the pandemic.”
The switchover of claimants to the unified benefit programme will resume on Monday and is due to conclude by the end of 2024.
Those who remain in receipt of one of the outgoing benefits will be “gradually notified of when they will be asked to move to Universal Credit”, the DWP said last week.
The department will assess claimants’ current entitlements and, where payments would otherwise be reduced under the terms of Universal Credit, will provide top-up payments to ensure the overall amount received remains the same.
In addition to the government-managed migration, citizens can also take steps to move themselves over to UC of their own accord – but are warned that, before doing so, they should first check how the payments they will receive under the new scheme will compare to their current entitlement, because only people migrated by the DWP will be eligible for the top-up payments.
Sam Trendall is editor of CSW's sister title PublicTechnology, where this story first appeared