Rishi Sunak has reportedly been prevented from increasing some benefits to help them keep pace with spiraling inflation due to outdated government computer systems.
The Chancellor reportedly wanted to help welfare recipients more in her spring statement, which set out measures to tackle the cost of living crisis, but has been criticized for not going far enough to help those less well-off .
Last month, Sunak increased his benefits by 3.1% based on last September’s Consumer Price Index measure of inflation.
He faced calls from economists across the political spectrum to raise them much more, given that inflation stood at around 7% – the highest level since 1992.
The Times reported that Sunak considered doing it, but Treasury was told “you could only do it once a year and that was not the time of year you could do it”.
The blame has been placed on the outdated IT system which distributes some benefits inherited from the past, such as Jobseeker’s Allowance and Employment and Support Allowance.
Both are being phased out to be replaced by Universal Credit, but hundreds of thousands of people still remain on the old schemes, which use a computer system that is around 40 years old.
Changes to inherited benefit payments need to be locked in the fall in order to arrive in the spring.
These are administered by paper-based systems and aging and inflexible computer systems that take months to process changes, while universal credit updates can be completed in weeks.
A spokesman for the Department for Work and Pensions said: ‘Parliament voted to end the complex web of six legacy benefits in 2012, and as that work nears conclusion in 2024, we are moving completely to one benefit modern, fit for the 21st century.
“We recognize the pressures people are facing with the cost of living, which is why we are providing support worth £22billion over the next financial year, including our Household Support Fund.
“Parliament voted in March 2022 to increase benefits by the usual measure.”
The Treasury has been contacted for comments.
Despite growing concerns that the economy is weakening amid the cost of living crisis, the Bank of England was expected to raise interest rates on Thursday to the highest level since the recession caused by the 2008 financial crisis .
Households across Britain are under intense pressure from soaring costs of living driven by record petrol prices and rising gas and electricity costs exacerbated by Russia’s war in Ukraine.
Experts have warned that the gauge for annual consumer price inflation could hit 10% later this year, five times the Bank of England’s 2% target.