Inflation falls to 0.5%, but will this trigger more benefit cuts?

Tue, 13/01/2015 - 14:03 -- nick

The UK's inflation rate has plummeted to a long-term low of 0.5% - but will a new Tory government use this as an excuse to cut benefits further?

The falls have been led by petrol prices - which few unemployed people use - and food - which we all have to buy, meaning some much-needed relief on the incomes of the poorest.

At other times luxury goods have led rises and falls in the Consumer Prices Index (CPI) which is the government's preferred measure of inflation, and this is why we oppose its use for working out the level of benefits.

At UnemployedNet we have campaigned for the introduction of a new measure to be used, the Benefits Price Index or BPI.

This would work out the real cost of living for those on a low income - primarily spending on food and energy - and increase all benefit payments by that amount every year to make sure claimants don't get left behind.

The current government is unlikely to take up this suggestion, preferring to demonise and impoverish the workless rather than help them live decent lives.

The Tory-led coalition capped annual increases in welfare at 1% from 2013, and inflation has been above this level since then apart from the figures for the last month released today.

This means anyone on benefits has lost a significant part of their already-tiny income as their cost of living increases, even without taking into account all the other reductions and caps the coalition has introduced in their war on the poor.

There is no escape for those in work either, despite work and pensions secretary Iain Duncan Smith claiming he wants to 'make work pay'.

His party announced at their 2014 conference that they will cap in-work benefits next, even as they trailed tax cuts for richer people.

This is despite the fact that Smith's main justification for the 1% limit to welfare uplifts was that pay rises were only running at that level, and unemployment should be limited by this.

The Tory party has been emboldened by the popularity of its war on the poor with a section of voters, and has constantly looked for new ways to fight it with ever-tougher policy suggestions.

If it wins the 2015 election it will reduce the benefit cap to £23,000 despite originally justifying the £26,000 limit by pegging it to average earnings, and some in the party have gone further, arguing for a cap of £18,000.

George Osborne is unlikely to see this fall in inflation without viewing an opportunity to peg benefits to an even lower annual cost-of-living rise, or perhaps even a total freeze.

We are faced with a sorry state of affairs when we have to look at all economic indicators, even those that look like good news for unemployed people, and imagine what terrible new punishments they could bring.

We have to though when it is clear that so many in the government are engaged in exactly this search.

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