Rishi Sunak says he ‘stands ready’ against inflation
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He claimed that benefits can only be increased “once a year” as a result of the IT systems, which have been dubbed “inflexible” by the Department for Work and Pensions. When asked about the possibility of providing further benefits support, the Chancellor replied: “The operation of our welfare system is technically complicated.
“It is not necessarily possible to [increase benefits] for everybody.
“Many of the systems are built so it can only be done once a year, and the decision was taken quite a while ago.”
Mr Sunak admitted that his answer “sounds like an excuse” but insisted that he had been “constrained somewhat by the operation of the welfare system”.
Speaking to Bloomberg, a spokesperson for the Department of Work and Pensions (DWP) said that the operations of the benefits system involved “complex and inefficient paper-based systems that are slowed further by ageing, inflexible IT”.
They admitted that changes take “several months to process.”
Meanwhile, a report from the Public Accounts Committee said that some DWP systems had been “unfit for purpose” for decades.
Millions of pensioner records are kept on a computer system that, dating back to 1988, was “intrinsically vulnerable” to errors, the committee noted.
Giving evidence to the committee in 2019, the DWP’s top technologist Simon McKinnon said it could take “many years” to level up the technology.
He added: “The state pension is run through a 30-year old system, but we have [rebuilt] parts of it – the ‘Check your state pension’ [service] has 12.5million page views in the last year.”
“Legacy systems”, he said, are “very critical to what we deliver… It is going to take many years, but it is our ambition to move away from them in due course.”
Mr Sunak’s comments come as the country is in the throes of an escalating cost of living crisis.
The country currently has an inflation rate of 6.2 percent, but it is expected to increase to more than 10 percent during the course of the year as a result of soaring energy bills.
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According to analysis by the Joseph Rowntree Foundation, around 600,000 people will be pulled into poverty as a result of the Chancellor’s failure to increase benefits in line with inflation.
Their report also said the 1.25 percent increase in National Insurance contributions would exacerbate the situation.
It found that households in poverty will be £445 worse off each year as a result of the changes.
Meanwhile, the chairman of Natwest bank, Sir Howard Davies, has said that changes to the benefits system are the best way to help the poorest.
Speaking to BBC Radio 4’s Today Programme, the former deputy governor of the Bank of England said: “The squeeze on living standards as a result of higher energy prices and higher food prices is really extraordinary.
“If you look at what people would need to do on their discretionary spending in order to offset those increases it’s massive.
“The bottom 20 percent of the population, they would have to reduce their discretionary spending by 20 percent to stay even financially.”
He added: “I think what [the government] need to do is to look at the incidence of the problem and where the worst elements of the squeeze are taking place.
“The problem lies at the bottom end of the income distribution where those people don’t have savings for the most part and therefore they have no cushion to dip into.
“I would be focusing on the bottom 20 percent and seeing what can be done to help them through the benefit system.”
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