Autumn Statement sets benefits uprating at 10.1% and raises benefit cap

The Chancellor's Autumn Statement on 17 November 2022 confirmed that the majority of benefits will be uprated by September's CPI figure of 10.1% from April 2023, and that the benefit cap will rise by the same amount¹. The cap has not been changed since 2016¹.

The uprating covers the State Pension, the Pension Credit minimum guarantee, Universal Credit, Child Benefit and most tax credit elements, excluding the childcare element, the family element and withdrawal rates and disregards. It also covers other working age benefits, disability benefits, guardian's allowance and some tax allowances including Married Couple's Allowance and Blind Person's Allowance¹. All changes take effect from April 2023 unless stated otherwise¹.

The new benefit cap levels, announced as annual figures, are set out below¹:

Three cost of living payments were announced: 8 million households on means-tested benefits will receive £900, paid in more than one instalment; 8 million pensioner households will receive £300; and 6 million people on non-means-tested disability benefits will receive £150¹. No details were given on when the payments will be made¹. The Household Support Fund will provide local authorities with £1 billion collectively to help households with the cost of essentials¹.

On energy, the Energy Price Guarantee limits the price households pay per unit of gas and electricity until March 2024. It currently subsidises a typical household's energy bill to £2,500 a year, and between April 2023 and March 2024 this will become £3,000¹. Equivalent support continues in Northern Ireland, and the government has said it will review the policy for all regions of the UK if needed¹. Households using heating oil, LPG, coal or biomass will receive a £200 payment this winter instead of £100, and all households in Northern Ireland will receive the £200 because of the number of homes using alternative fuel¹.

Most Income Tax and National Insurance thresholds are frozen until 2028, extended from the previously announced 2026. Employees will not pay income tax or National Insurance on earnings up to £12,570, and the 20% basic rate of income tax plus 12% Class 1 employee National Insurance rate applies to earnings up to £50,270 until 2028¹. The threshold at which higher earners start to pay the 45% rate falls from £150,000 to £125,140, and Class 2 and 3 National Insurance rates rise by 10.1%¹. The National Living Wage becomes £10.42 an hour for workers aged 23 and over, £10.18 for 21 to 22 year olds, £7.49 for 18 to 20 year olds and £5.28 for 16 to 17 year olds and apprentices¹.

Why it matters for households

The 10.1% uprating applies from April 2023 to the main benefits, so most working age and pensioner claimants see their award rates rise by that figure¹. The cap rise matters to households whose total benefit income is limited by the cap: the limits rise for the first time since 2016, so some households previously capped may keep more of their award¹. The three cost of living payments are separate from benefit rates and are paid to defined groups, with the timing not yet reported¹.

Energy support changes in April 2023: the guarantee continues to March 2024 but the typical household bill it subsidises rises from £2,500 to £3,000 a year¹. The £200 alternative fuel payment replaces the £100 payment this winter¹. Tax and National Insurance thresholds frozen to 2028 mean more earnings fall into higher rates over time, and the 45% rate starts at £125,140 rather than £150,000¹.

For renters, social rents can rise by a maximum of 7% from April 2023, with benefits covering the increase unless the household is affected by the cap. Local Housing Allowance, which sets help with private rents, is frozen in April¹. Homeowners claiming Universal Credit can apply for a Support for Mortgage Interest loan; the waiting period falls from 9 months to 3 months and working claimants become eligible¹. Council tax can rise by 3%, plus 2% for authorities with social care responsibilities¹.

What happens next

The migration of most of the 1 million people claiming income-related Employment and Support Allowance to Universal Credit is delayed until April 2028, as is the new housing element of Pension Credit, with eligible pensioners continuing on Housing Benefit until then¹. The Administrative Earnings Threshold rises from January 2023, from the equivalent of 12 hours to 15 hours at the National Living Wage, and from September 2023 low earners will meet their work coach quarterly under the In-Work Progression Offer¹.