Autumn Statement: Benefit rise caps won't beat inflation

Handing over cash

Most working-age benefits are set to rise by 1% from April 2013 for the next three years, Chancellor George Osborne has announced in today's Autumn Statement.

Jobseeker's Allowance, Employment and Support Allowance and Income Support will be increased by 1% for the next three years. However, the capped rise is less than the current rate of inflation, which is 2.7% (consumer prices index).

The Chancellor said the reason behind some of the rises that fail to keep up with inflation was to make the welfare system fairer to the working people who pay for it. He said average earning for working people increased by 10% since 2007 while income for those out of work increased by 20% over the same period.

However, benefits for carers and the disabled, including disability elements of tax credits, will be increased in line with inflation.

Meanwhile, child benefit will be will be frozen in April 2013 but will rise by 1% in 2014/15 and 2015/16.

The Chancellor said changes to the welfare system will save the Treasury £3.7 billion by 2015/16.