Rishi Sunak was reportedly blocked from raising some benefits to help them keep pace with spiralling inflation as a result of out-of-date government IT systems.
The chancellor was said to have wanted to help those in receipt of welfare more in his spring statement, which set out measures to tackle the cost of living crisis, but was criticised for not going far enough to help the least well off.
Last month, Sunak raised benefits by 3.1% – based on the consumer prices index measure of inflation last September.
He faced calls from economists across the political spectrum to increase them significantly more, given inflation stood at about 7% – the highest level since 1992.
The Times reported that Sunak considered doing so, but that the Treasury was told “you could only do it once a year and this was not the time of year that you could do it”.
Blame was levelled on the antiquated IT system that distributes some legacy benefits – such as jobseeker’s allowance and the employment and support allowance.
Both are being phased out to be replaced by universal credit, but hundreds of thousands of people still remain on the old schemes, which use an IT system about 40 years old.
Changes to the legacy benefit payments have to be locked in in the autumn in order to arrive by spring.
These are administered by paper-based systems and ageing, inflexible IT systems that take months to process changes, while universal credit updates can be done in a matter of weeks.
A spokesperson for the Department for Work and Pensions said: “Parliament voted to end the complex web of six legacy benefits in 2012, and as this work approaches its conclusion in 2024 we are fully transitioning to a modern benefit, suited to the 21st century.
“We recognise the pressures people are facing with the cost of living, which is why we’re providing support worth £22bn across the next financial year including our household support fund.
“Parliament voted in March 2022 to uprate benefits by the usual measure.”
The Treasury was contacted for comment.
Despite mounting concern that the economy is weakening amid the cost of living crisis, the Bank of England was on Thursday expected to raise interest rates to the highest level since the recession caused by the 2008 financial crisis.
Sign up to First Edition, our free daily newsletter – every weekday morning at 7am BST
Households across Britain are under intense pressure from soaring living costs driven by record petrol prices and rising gas and electricity costs exacerbated by Russia’s war in Ukraine.
Experts have warned the gauge for the annual jump in consumer prices could reach 10% later this year, five times the Bank of England’s 2% target.
