Rishi Sunak was reportedly blocked from increasing some benefits to help them keep up with rising inflation due to outdated government IT systems.
In his spring statement, outlining measures to tackle the cost-of-living crisis, the chancellor said he would like to do more to help benefit recipients, but he was criticized for not going far enough to help those less fortunate.
Last month, Sunak increased benefits by 3.1% based on last September’s consumer price index inflation index.
He faced calls from economists across the political spectrum to raise them significantly more, as inflation stood at around 7% — the highest level since 1992.
The Times reported that Sunak considered doing this, but the Treasury was told “you could only do it once a year and this was not the time of year you could do it”.
The blame was placed on the outdated IT system that distributes a number of legacy benefits, such as the jobseeker benefit and the employment and support benefit.
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 a roughly 40-year-old IT system.
Changes to the old benefits must be locked in in the fall to come in in the spring.
These are managed by paper-based systems and outdated, inflexible IT systems that take months to process changes, while universal credit updates can be done in a matter of weeks.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 of Work and Pensions said: “Parliament voted in 2012 to end the complex web of six legacy benefits and as this work nears its end in 2024, we will transition fully to a modern benefit, suitable for the 21st century.
“We recognize the pressures people are facing with the cost of living, which is why we are providing support worth £22 billion in the next financial year, including our household fund.
“Parliament voted in March 2022 to increase benefits in the usual way.”
The Ministry of Finance has been contacted for comment.
Despite growing concerns that the economy is being weakened by the cost of living, the Bank of England was expected to raise interest rates to the highest level since the recession triggered by the 2008 financial crisis on Thursday.
Households across Britain are under great pressure from the rising cost of living resulting from record petrol prices and rising gas and electricity costs, exacerbated by Russia’s war in Ukraine.
Experts have warned that the benchmark for annual consumer price increases could reach 10% later this year, five times the Bank of England’s 2% target.