Scottish low income benefits uprated by 6% in April 2022

Scottish low income benefits were uprated by 6% in April 2022, compared with 3.1% for most reserved benefits, according to a Scottish government analytical report published on 2 November 2022¹. The report attributes part of the pressure on low income households to this difference, describing it as "largely due to the 6% uprating of the Scottish low income benefits in April 2022 compared with 3.1% for most reserved benefits"¹.

Reserved benefits and state pensions were uprated in April 2022 using the annual rate of CPI to September 2021, which was 3.1%¹. The report notes this was significantly lower than the 7.0% CPI recorded in March 2022, just before benefits were uprated, and that inflation had risen to 10.1% by September¹. By comparison, PAYE data show median monthly nominal pay grew 4.7% over the year in August 2022 but fell 4.4% in real terms, the seventh consecutive month of negative annual growth¹.

The report also sets out the wider position of households receiving income-related benefits. The temporary £20 per week increase in Universal Credit and Working Tax Credit, announced in March 2020 to "strengthen the safety net" during the pandemic, was withdrawn in October 2021, which the report says meant a fall in income for over 400,000 households in Scotland¹. A welfare reform report estimated that reinstating the £20 uplift would cost £540 million in Scotland in 2023/24, equivalent to the total income lost in that year as a result of the withdrawal, including knock-on effects on devolved benefits such as the Scottish Child Payment¹.

On financial resilience, the report states that 30% of households in Scotland did not have enough savings to keep them above the poverty line for one month if they lost their income, rising to 50% for the lowest-income 20% of households¹. The Trussell Trust found that 17% of people receiving Universal Credit visited a food bank between December 2021 and March 2022¹. The report also cites IFS analysis that lower income households spend almost three times as much of their budgets on gas and electricity as the highest-income tenth on average, 11% versus 4%, and an IFS prediction in August that the poorest fifth would face an 18% inflation rate in October 2022 compared with 11% for the richest fifth¹.

Why it matters for households

The 6% uprating applied to Scottish low income benefits from April 2022, while most reserved benefits rose by 3.1% on the same date¹. For households in Scotland receiving income-related benefits, the report describes a period in which the £20 weekly Universal Credit uplift had already been withdrawn in October 2021, affecting over 400,000 households in Scotland, and in which benefit uprating was based on a September 2021 inflation figure of 3.1% while CPI reached 10.1% by September 2022¹. The report states that in 11 of the last 15 years the value of unemployment-related benefits, including Universal Credit and Jobseeker's Allowance, has declined, leaving around 14% less purchasing power than in 2008¹. It also notes that around 10,000 households in Scotland may earn just too much to qualify for Universal Credit¹. How the 6% Scottish uprating compares with later years is not set out in the report.

What happens next

The report records that from 1 October 2022 the £400 Energy Bills Support Scheme discount became available to the 1% of households who had not previously received it, and that all households connected to mains electricity would receive the £400 discount announced in May¹. It also notes that BEIS announced further detail on the energy price guarantee on 21 September, targeted at some rural households and people using off-gas grid fuel¹. The report does not set out further uprating decisions beyond these measures.

For background on how the different nations pay benefits, see devolved benefits and money help in Scotland. The benefits hub and the guide to how rates rise each April cover uprating more generally.