Treasury Minister defends latest benefit increases
Commenting on those increases, which were mostly 5%, Douglas East MHK Joney Faragher said: ‘Last month, the month that the Budget was released, inflation stood at 6.4%. How can we actually ensure that this situation does not arise again and that benefit support is linked with need, that state support is linked with need?’
Ashford says not really below inflation if you take out some of the things used to calculate inflation
Benefit increases are not falling behind inflation if you discount some of the things that contribute to… inflation.
That was part of the defence offered by Treasury Minister David Ashford this week after he came under fire for benefit increases in last month’s budget not matching the rate of inflation.
Commenting on those increases, which were mostly 5%, Douglas East MHK Joney Faragher said: ‘Last month, the month that the Budget was released, inflation stood at 6.4%. How can we actually ensure that this situation does not arise again and that benefit support is linked with need, that state support is linked with need?’
But the minister said we had to be ‘careful’ about headline inflation figures.
‘There are certain things underneath that are actually driving that inflation rate,’ he said. ‘For instance, one of the big contributors is air travel, which has seen an inflationary increase of 79.9% in the last 12 months.
‘If that is actually stripped out of 6.4% inflation, inflation actually falls back to 3.9%.’
Earlier in the exchange, which took place in the House of Keys, Ms Faragher said: ‘Energy prices are rising sharply, food prices are rising and inflation is rising.
‘Our calculated living wage puts our cost of living on a par with London. We know that people at the upper end of the economic spectrum can adapt to this, but how can we expect those in the lowest quartile to do so when we know that they are already choosing between heating and eating?’
She added: ‘Inflation disproportionately affects the poorest, which is something that the UK Office of National Statistics – has acknowledged.’
Mr Ashford said the inflation rate was taken into consideration when setting benefit increases, but the figure considered for the April increase was taken from the previous September’s CPI rate because the review of benefit rates took place in the autumn. He said it wouldn’t be possible to review and increase rates more than once a year.
He added that work was ‘progressing’ on the Tynwald resolution that income-related benefits should include a proportional link to the living wage, but it was ‘not straightforward’.
