UK’s Truss Stresses Fiscal Responsibility, Refuses to Rule out Real-Term Benefit Cut

Prime Minister Liz Truss and Chancellor of the Exchequer Kwasi Kwarteng during a visit to a construction site for a medical innovation campus in Birmingham, on Oct. 4, 2022. (Stefan Rousseau/PA Media)

UK Prime Minister Liz Truss has stressed she must take a responsible approach to the public finances, refusing to rule out real-terms cuts to benefits.

Both the Cabinet and the wider Conservative Party are split on whether benefits should increase in line with inflation.

Leader of the House of Commons Penny Mordaunt, who ran against Truss in the Tory leadership contest, has publicly backed increasing benefits in line with inflation so that people can pay their bills.

Truss has committed to increase pensions in line with prices but on benefits said “we have to be fiscally responsible.”

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 ($1.8 billion) to welfare spending.

Welfare Commitments

During a visit to Birmingham on Tuesday, Truss told broadcasters that the government has not yet made a decision on benefits, but pledged to help the most vulnerable through the winter.

“In addition to the energy price guarantee we’ve also made sure the most vulnerable households have an extra £1,200 [$1,361] and this government will always help people get on in life, whilst making sure the most vulnerable are protected,” she said.

Earlier, when pressed on why she has committed to increasing pensions but not benefits, she told LBC radio: “What I mean is when people are on a fixed income, when they are pensioners, it is quite hard to adjust. I think it’s a different situation for people who are in the position to be able to work.”

Asked if she would rule out austerity, she said she has committed to reducing debt as a proportion of national income over the medium term.

Tories Split

Truss has met opposition on the issue from senior Conservatives, including Mordaunt.

“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 and so have a lot of my colleagues,” Mordaunt told Times Radio.

“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,” she said.

Former Cabinet ministers Michael Gove, Damian Green, and former party leader Sir Iain Duncan Smith have also spoken out with concerns about any failure to raise benefits in line with inflation.

PA Media contributed to this report.