Benefits are due to go up by 5.2% from next April, in line with September'​s inflation figures. However, the government is worried about the cost of such hikes and the impact on public opinion given the current low wage increases. The Financial Times is reporting that Chancellor George Osborne has asked officials for alternative models, including a rise in line with average earnings growth of about 2.5% or freezing some payments.

It is understood the government will have "​resolved"​ the options by early December when the uprating of benefits is presented to Parliament. The Institute of Fiscal Studies has calculated that the 5.2% September inflation figure will add £​1.8bn to welfare spending next year.It said freezing all benefits and pensions would save about £​10bn and linking benefits increases to wage rises would save £​5bn.

A further option of switching from the September inflation figure to an average inflation figure calculated over six months could save about £​1.4bn, the IFS added.


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