Bloomberg News

U.K.’s Alexander Confirms Welfare Rise May Not Match Inflation

November 20, 2011

Nov. 20 (Bloomberg) -- U.K. Chief Secretary to the Treasury Danny Alexander confirmed ministers are considering whether to increase welfare payments by less than inflation as 18 Church of England bishops attacked a proposed cap on benefits.

Chancellor of the Exchequer George Osborne will deliver his autumn statement on Nov. 29, setting out how he’s adjusting his deficit-reduction program in response to the euro-zone crisis and slower growth. One decision is whether to continue the government’s usual practice of increasing welfare payments by the inflation rate in September, when the consumer price index reached a three-year high of 5.2 percent.

The decision to cut costs was “very difficult,” but was “based on principle and the long-term benefit of the welfare system,” Alexander told Sky News today. “In looking at this uprating issue, which as you say we are looking at, we have to make sure we handle it in the same way.”

A separate plan to cut welfare spending by capping the total payment any family can receive at about 500 pounds ($790) a week were attacked by a group of Church of England bishops, who wrote to the Observer newspaper saying the idea would be “profoundly unjust” to the poorest children in society. The government argues it is unfair to pay people more in benefits than the average income of people in work.

--Editors: Hilton Shone, Dylan Griffiths

To contact the reporter on this story: Robert Hutton in London at rhutton1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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