"Average Earnings Growth" and triple lock

Grumpy_chap

I was confused by the BBC reporting on this.

"traditionally these figures are used to uprate many benefits for working age people - some may see an increase of about 6% in their universal credit payments next spring."

https://www.bbc.co.uk/news/articles/cvg4d13p33yo

I understand the link between inflation or wages on State Pension but I always understand that UC etc was only based on inflation.

molerat

It is a change in the benefits system announced in July giving an above inflation increase, CPI + 2.3%, to UC each year until 2029.  https://commonslibrary.parliament.uk/research-briefings/cbp-10358/

SnowMan

molerat said:

It is a change in the benefits system announced in July giving an above inflation increase, CPI + 2.3%, to UC each year until 2029.  https://commonslibrary.parliament.uk/research-briefings/cbp-10358/

Important to say the 2.3% 'increase' only effectively applies to claimants who don't qualify for the health elements of universal credit (UC). There is a significant reduction in UC for future claimants who qualify for the health element of UC. They describe it as a 'rebalance' although that's not the word I would use.

The Universal Credit Act 2025 legislated for changes which will ‘rebalance’ UC rates from April 2026 by increasing the basic standard allowance that all claimants receive, while reducing the additional payments for most claimants newly found to have disabilities and health conditions that affect their capability for work

Grumpy_chap

molerat said:

It is a change in the benefits system announced in July giving an above inflation increase, CPI + 2.3%, to UC each year until 2029.  https://commonslibrary.parliament.uk/research-briefings/cbp-10358/

So state pension increases by triple lock which results in an upward trend faster than salaries.

UC will increase by a rate higher than inflation.  I understand that will also result in an upward trend faster than salaries.

It seems to be basic mathematics that combination is not sustainable in the long term.

Have I missed something?

Conscious of keeping the comment factual and not political.

BlackKnightMonty

Grumpy_chap said:

molerat said:

It is a change in the benefits system announced in July giving an above inflation increase, CPI + 2.3%, to UC each year until 2029.  https://commonslibrary.parliament.uk/research-briefings/cbp-10358/

Have I missed something?

No, not at all. This is the problem the current arrangement of welfare (incl. State Pension) increasing above wages year on year is unsustainable. But so many people are now on welfare it’s political suicide to tackle the issue.

Alexland

BlackKnightMonty said:

But so many people are now on welfare it’s political suicide to tackle the issue.

But so many people are now hard up taxpayers that it's political suicide not to tackle the issue.

At this rate we will end up like France.

It was so misleading calling it a 'lock' as it's clearly an escalation mechanism.

A lock would just be a promise to match inflation which most people would agree is reasonable.

Phossy

Shouldn't the comparative baseline here be the cost of living. My sense is that wages have not kept up with the cost of living and have seen a fall in real terms over many years. Rather than focus on Welfare increasing above wages, I would have thought it was important that all rise in line with the cost of living. If wages were at an appropriate level then folks wouldn't need to work and need UC.

ewaste

Grumpy_chap said:

molerat said:

It is a change in the benefits system announced in July giving an above inflation increase, CPI + 2.3%, to UC each year until 2029.  https://commonslibrary.parliament.uk/research-briefings/cbp-10358/

So state pension increases by triple lock which results in an upward trend faster than salaries.

UC will increase by a rate higher than inflation.  I understand that will also result in an upward trend faster than salaries.

It seems to be basic mathematics that combination is not sustainable in the long term.

Have I missed something?

Conscious of keeping the comment factual and not political

Yes you clearly missed what SnowMan posted

SnowMan said:

Important to say the 2.3% 'increase' only effectively applies to claimants who don't qualify for the health elements of universal credit (UC). There is a significant reduction in UC for future claimants who qualify for the health element of UC. They describe it as a 'rebalance' although that's not the word I would use.

The Universal Credit Act 2025 legislated for changes which will ‘rebalance’ UC rates from April 2026 by increasing the basic standard allowance that all claimants receive, while reducing the additional payments for most claimants newly found to have disabilities and health conditions that affect their capability for work

It's like the State Pension Changes in 2016, there are longer terms savings to be made and the pain is delayed. Although in both cases the majority are too willfully ignorant to look beyond the headlines, meanwhile efficiencies are made on the backs of future generations to fund the largesse of the current.

QrizB

Phossy said:

My sense is that wages have not kept up with the cost of living and have seen a fall in real terms over many years.

The statistics say otherwise; earnings have grown faster than CPI.

BlackKnightMonty

QrizB said:

Phossy said:

My sense is that wages have not kept up with the cost of living and have seen a fall in real terms over many years.

The statistics say otherwise; earnings have grown faster than CPI.

Could you share those statistics please.