Benefits to be uprated by September 2021 inflation in April 2022

Benefits including Universal Credit were uprated in April 2022 in line with September 2021's rate of inflation, the Resolution Foundation said in a report published on 26 September 2021¹. The think tank noted that "benefit levels will be uprated in April 2022 by September 2021's rate of inflation, as convention dictates"¹. Because the uprating is based on the preceding September's figure, the report said it was questionable whether the spring increase would fully reflect the rise in prices over the winter¹.

The report set out the wider income picture for the months either side of that uprating. It said the Bank of England had forecast inflation rising above 4 per cent in the coming months, the highest rate seen in the UK since 2011, while average weekly earnings were forecast to grow by just 2.25 per cent by the end of 2021 once temporary Covid-19 labour market effects were stripped out¹. It also pointed to a rise in employee National Insurance contributions in April 2022, which it said would place further downward pressure on the income of most working families, in exchange for better funded healthcare¹.

On the Universal Credit uplift introduced during the pandemic, the report said over 4 million families would see £20 a week cut from Universal Credit in October 2021¹. It described this as an average income reduction of 5 per cent, but as much as a 25 per cent fall in the value of the standard allowance for a young single claimant, and 15 per cent for a couple where either partner is aged 25 or over¹.

The report modelled the effect on several example households by April 2022, after the uprating and other changes¹:

The report said the OBR forecast an uplift in the National Living Wage of 4.2 per cent from £8.91 an hour to £9.28, with the Government to confirm the rate later in autumn 2021¹. It also assumed the expected increase in the energy price cap rate the following April, of a further 19 per cent, was passed on in full to its example families¹. Council Tax was forecast to rise by 1.9 per cent in 2022-23, against 4.4 per cent in 2021-22, which the report estimated as an increase of up to £1 a week for families, though it noted a risk of higher increases¹.

Why it matters for households

The uprating applied from April 2022 to benefit levels, including Universal Credit, and was set by the September 2021 inflation figure rather than by the higher inflation that followed over the winter¹. For households whose income comes wholly or partly from benefits, that timing meant the winter's price rises were not reflected in award amounts until the following year's uprating, as the report set out¹. The same report put the October 2021 removal of the £20 a week Universal Credit uplift at over 4 million families, alongside an April 2022 rise in employee National Insurance contributions and higher energy bills¹. Working claimants on Universal Credit are subject to a taper rate, which the report said meant their income rose by 37p or less for every extra £1 of earnings over the winter months¹. The report also noted that families without children and not entitled to Universal Credit were unaffected by both the £20 cut and the benefit uprating¹.

What happens next

The report, published on 26 September 2021, looked ahead to the October 2021 removal of the £20 Universal Credit uplift, the April 2022 benefit uprating, the April 2022 rise in employee National Insurance contributions and the April 2022 energy price cap change¹. It said the Government was to confirm the National Living Wage rate later in autumn 2021¹. No further dated steps are set out in the report.