Working age benefits to be uprated by September CPI of 6.7%

Working age benefits will be increased by 6.7% from April 2024, using September's Consumer Prices Index rate, according to the Autumn Statement of November 2023¹. Pension age benefits will rise by 8.5%, the average annual increase in wages across the UK in September, under the rules of the triple lock¹. The uprating process applies the previous September's inflation figure to the following April's rates.

The 6.7% increase covers Adoption Pay, Attendance Allowance, Carer's Allowance, Child Benefit, Disability Living Allowance, Employment and Support Allowance, Guardian's Allowance, Incapacity Benefit, Income Support, Jobseeker's Allowance, Maternity Allowance, Parental Bereavement Pay, Paternity Pay, Personal Independence Payments, Shared Parental Pay, Sick Pay, Statutory Maternity Pay, Tax Credit and Universal Credit¹. Pension Credit and the State Pension rise by 8.5%¹. The triple lock sets pension age benefits at the highest of wages, September's CPI or 2.5%¹.

The freeze to Local Housing Allowance rates, in place since 2020, will be lifted, with maximum amounts increased to the 30th percentile of local market rents¹. The 30th percentile covers the bottom 30% of market rents in an area, meaning the LHA will cover the rents of up to three in every 10 homes¹. The rule is being applied for one year only¹. LHA amounts vary by area and by the number of bedrooms a household is assessed as needing¹.

Other measures announced include a cut in Class 1 National Insurance from 12% to 10% on earnings between £12,570 and £50,270, effective January 2024, and the abolition of Class 2 National Insurance, a flat rate of £3.45 a week paid by people earning more than £12,570 a year, which can still be paid voluntarily¹. Class 4 contributions fall from 9% to 8% on earnings between £12,570 and £50,270¹. The National Living Wage rises from £10.42 to £11.44 an hour for those aged 23 and over, and from £10.18 to £11.44 for 21 to 22 year olds¹. The National Minimum Wage rises from £7.49 to £8.60 for 18 to 20 year olds and from £5.28 to £6.40 for 16 to 17 year olds and apprentices¹.

The Universal Credit surplus earnings threshold of £2,500 will be extended for another year until at least April 2025¹. From February 2024, those qualifying for a Severe Disability Premium transitional payment will receive an additional £84 to £246 a month depending on which disability premiums they used to get¹. From late 2024, people in England and Wales will need to take mandatory work placements if they have not found a job after 18 months¹. From 2025, there are plans to change the activities and descriptors needed to pass a Work Capability Assessment for new claimants of new style Employment and Support Allowance and some elements of Universal Credit¹.

Separate research published in December 2023 found the number of households in serious financial difficulties had risen from 2.8 million, or 10% of all households, to 4.8 million, or 17%, over two years². It recorded that 9% of all households had used a foodbank in the past six months, rising to 24% of those receiving income-related benefits and 20% of those receiving disability-related benefits². The same research noted the uprating of working age benefits to the September inflation rate of 6.7% from April 2024, the state pension uprating of 8.5%, and the temporary unfreezing of Local Housing Allowance to the 30th percentile of rents².

Why it matters for households

The 6.7% rise applies to the rates paid from April 2024, so the cash amount of each working age benefit increases by that percentage from the start of the financial year¹. Because the figure is fixed to September 2023's inflation reading, it does not respond to price changes after that month. Pension age benefits rise faster, at 8.5%, under a different measure¹.

For private renters claiming Universal Credit or Housing Benefit, the maximum housing support is reset to the 30th percentile of local rents, ending a freeze that had run since 2020¹. The change is for one year, and the 30th percentile is below the 50th percentile last used in 2011, so many households will still have rent above the cap¹. The difference between CPI and RPI matters here because the uprating figure is CPI, not RPI.

The National Insurance changes affect take-home pay from January 2024 for employees, and from April 2024 for the self-employed¹. The research notes that for Universal Credit claimants, higher net earnings reduce the award through the 55% taper, so part of the gain is clawed back¹.

What happens next

The benefit and LHA changes take effect in April 2024¹. The Class 1 National Insurance cut took effect in January 2024, having been brought forward from April 2024 on 30 November 2023¹. The SDP transitional payments begin in February 2024¹. Mandatory work placements for people in England and Wales out of work for 18 months are due from late 2024, and the Work Capability Assessment changes are planned from 2025¹.