Liz Truss has refused to commit to raising benefits in line with inflation, despite growing pressure from a cabinet minister and senior Tory MPs.
“It’s very difficult when you are a pensioner to adjust your income in any way,” she told Nick Ferrari on LBC.
“People are facing higher prices. Of course, what we’re doing on the energy price guarantee will help people with those prices. Now, no decision has been made yet on benefit uprating. That decision will be made in due course.”
Asked if she will rule out austerity, she said she has committed to reducing debt as a proportion of national income over the medium term.
“Well, I wouldn’t use the term you describe. What I’m talking about is fiscal responsibility,” she added.
Ministers hint at cabinet split
Ms Truss is facing a fresh battle with Conservative MPs over a potential benefits squeeze and cuts to public spending, after already being forced into making a policy U-turn on her tax cuts yesterday.
It is understood that Downing Street is considering increasing Universal Credit using a lower metric, such as the increase in average earnings, instead of inflation.
Penny Mordaunt became the first cabinet minister to openly oppose the idea of not uprating benefits with inflation, telling Times Radio: “I’ve always supported – whether it’s pensions, whether it’s our welfare system – keeping pace with inflation. It makes sense to do so. That’s what I voted for before.”
The House of Commons Leader added: “We want to make sure that people are looked after and that people can pay their bills. We are not about trying to help people with one hand and take away with another.”
Ms Mordaunt appears to have taken a different line to Brandon Lewis, the justice secretary – hinting at a cabinet split on the matter.
He refused to give his position when asked about the government’s plans to uprate benefits on Sky News, telling Kay Burley: “There is a process around this that the Department for Work and Pensions, Chloe Smith, the secretary of state, works through.”
He said announcements will be made “over the autumn”, adding: “I’m not going to pre-judge what that will be.”
The comments come after a slew of senior Tories called on the PM to row back on cutting public spending in the middle of the cost of living crisis.
On Monday, senior Conservative MP Damian Green told Sky News: “The government should uprate in line with inflation. The previous government said it was going to, so people are expecting this.”
Former transport secretary Grant Shapps has also stepped up the pressure. Asked if he would want to see benefits increased in line with inflation, he said: “Of course, every politician would want to see that.”
Benefits are usually uprated in line with the consumer price index (CPI) rate of inflation from September, with the rise coming into effect the following April.
The Institute for Fiscal Studies estimates that each percentage point rise in CPI adds £1.6 billion to welfare spending.
The latest row comes as the government dramatically dropped its plans to abolish the 45% tax rate on earnings over £150,000 following widespread criticism, including from Tory MPs.