The Department for Work and Pensions has been asked to consider implementing benefit increases that are based on essential living costs. Most DWP and HMRC benefits will rise by 1.7 per cent from April, in line with September’s inflation figure, while the State Pension will go up by a higher amount of 4.1 per cent under the triple lock guarantee.
Campaigners have been calling for an Essentials Guarantee, particularly on Universal Credit, where payment levels would be set to match the total required for everyday household costs, excluding rent and council tax. Analysis by the Joseph Rowntree Foundation last year suggested it would need to be at least £120 a week for a single adult and £200 for a couple, above the standard allowances currently offered by Universal Credit which are £393.45 a month for a single adult over 25 and £617.60 for a couple over 25.
The guarantee would mean the standard allowance would need to at least meet this amount, and deductions (such as debt repayments or because of the benefit cap) would not be allowed to reduce support below that level. It would also see an independent process put in place to regularly recommend the level of the Essentials Guarantee based on the average prices of essentials such as food, electricity, gas, water, toiletries, broadband and phones.
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The idea resurfaced in a parliamentary question by Seamus Logan of the Scottish National Party. The SNP member for Aberdeenshire North and Moray East asked Work and Pensions Secretary Liz Kendall “whether she has made an assessment of the potential merits of establishing an independent process to set benefit levels according to the cost of essential goods and services.”
Sir Stephen Timms, DWP Minister for Social Security and Disability, responded this week. He said, “No such assessment has been made. The Social Security Administration Act 1992 requires the Secretary of State for Work and Pensions to review benefit and State Pension rates each year to see if they have retained their value in relation to the general level of prices or earnings.
“Where the relevant benefit or State Pension rates have not retained their value, legislation provides that the Secretary of State is required to, or in some instances may, uprate their value. Following this review, benefit and State Pension rates are increased in line with statutory minimum amounts and others are increased subject to Secretary of State’s discretion.
“Following the Secretary of State’s uprating decisions for 2025/26, DWP expenditure on State Pensions and benefits will increase by £6.9 billion.”
The Joseph Rowntree Foundation’s research found that around five in every six low-income households on Universal Credit are currently going without essentials. Support has eroded over decades, and the standard allowance of Universal Credit is now at its lowest-ever level as a proportion of average earnings, it said
The foundation pointed out that “inadequate social security” is the main driver of food bank use and that two-thirds of the public believe the basic rate of Universal Credit is too low. Almost half of households on the benefit see their payments reduced by deductions and caps.
At present, 25 per cent of the standard allowance can be used to repay debts to the DWP although Labour will introduce a Fair Repayment Rate from April 2025 to reduce this to 15 per cent. This is expected to help 1.2 million families, including 700,000 with children.
The government has calculated that some of the poorest households will be £420 better off as a result of the measure. Save the Children estimates that single parents could receive up to £39 more of their Universal Credit entitlement each month. For two-parent families, this could be up to £62.
Deductions are made from monthly Universal Credit payments for a number of reasons, including recovering arrears on rent, council tax, water and energy bills; repaying benefit loans offered to new claimants and to existing claimants asking for help with emergency expenses; and clawing back overpayments from those who were previously on tax credits.
Universal Credit payment rates 2025/2026
All amounts are per month, as Universal Credit is a monthly benefit paid to a claimant on the same date.
Standard allowance
Single under 25: increasing from £311.68 to £316.98
Single 25 or over: increasing from £393.45 to £400.14
Couple, both under 25: increasing from £489.23 to £497.55
Couple, one or both 25 or over: increasing from £617.60 to £628.10
Child amounts
First child (born prior to 6 April 2017): increasing from £333.33 to £339.00
First child (born on or after 6 April 2017) / second child and subsequent child (where an exception or transitional provision applies): increasing from £287.92 to £292.81
Disabled child additions
Lower rate addition: increasing from £156.11 to £158.76
Higher rate addition: increasing from £487.58 to £495.87
Incapacity payments
Limited Capability for Work (LCW) amount: increasing from £156.11 to £158.76 (only payable for claims before April 2017)
Limited Capability for Work and Work-Related Activity (LCWRA) amount: increasing from £416.19 to £423.27
Carer element
Increasing from £198.31 to £201.68
Childcare costs that can be claimed back
Maximum for one child: increasing from £1014.63 to £1031.88
Maximum for two or more children: increasing from £1739.37 to £1768.94
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