The meaning of this week’s tax and benefit changes
This week’s tax and benefit changes are a significant moment for the Government. Benefit changes for working-age families are based on historic inflation in the year to last September 6.7 per cent. That means they sound large compared with current inflation, now falling fast, even if they are only a catch-up to restore the real losses from inflation.
However, older people get a hefty 8.5 per cent increase for the state pension, taking it to £221 per week. That higher increase for the pensioners is the effect of the triple lock. When the increases were set last autumn, pay was rising faster than prices so pensioners get more.
The triple lock has been an extraordinary dividend for pensioners. Since 2010 it so happens both prices and earnings have gone up by about 46 per cent. However, the state pension has gone up by 60 per cent, way ahead. But the basic benefit rate for working-age families have gone up by 30 per cent – significantly less than prices.
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