Accredited official statistics

Abstract of DWP benefit rate statistics 2023

Published 24 January 2024

Applies to England, Scotland and Wales

1. Summary

The Abstract of Department for Work and Pensions (DWP) benefit rates statistics is an annual publication produced by DWP. The purpose of the publication and data tables is to provide a reference source for people who are interested in:

• benefit up-rating

• the value of benefits compared to prices and earnings

The aim is to provide answers to questions like:

• how does the value of state benefits compare to prices?

• are state benefits worth more or less today than in previous years, in terms of average earnings?

2. Key findings

This report covers benefit up-rating up to April 2023.

At April 2023, most DWP benefit rates were raised in line with Consumer Prices Index (CPI) inflation growth as recorded at September 2022 which was 10.1%.

The government reinstated the earnings element of the Triple Lock in 2023. State Pension rates were uprated in line with CPI of 10.1% in April 2023, which was higher than average wage growth (5.5%).

While CPI inflation was still increasing in the period leading up to the 2023 up-rating, the rate of increase was relatively stable. In April 2023, CPI inflation was 8.7% (similar to April 2022, when CPI inflation was 9.0%).

3. Benefit up-rating

This section explains policy changes and highlights the factors involved in benefits up-rating from 1974 until 2023. Benefits have been uprated by a variety of methods during this period, including:

• forecasts

• indices of prices and earnings

• one-off payments

• targeting of particular components of a benefit

• revisions to the eligibility rules governing the benefit

Price inflation and earnings growth indices in benefit up-rating since 1974

Over time, there have been various changes to the components of the indices that have been used to uprate benefits. The major changes have been:

In 1974 long-term benefits such as pensions and long-term sick and disabled benefits were linked to the higher of one of two annual increases, as measured by the Retail Prices Index (RPI) and the Average Earnings Index.

In 1976 a forecast was used to estimate the movements in price inflation and earnings growth.

Long-term benefits were linked to the prices index only in 1979.

A historical basis was used to calculate the price increases in 1983. Rossi was introduced in 1983, calculated as RPI (all items) less housing costs, to uprate income-related benefits. The Rossi index was named after the government minister Sir Hugh Rossi.

In 1992 the definition of Rossi changed to New Rossi which is calculated as RPI (all items) less rent, local taxes and mortgage interest payments.

Between 1983 and 2010, benefits were uprated in relation to the RPI, Rossi or New Rossi. The actual increase in particular benefits depends on the index applied and on policy decisions as to the appropriate rate for the benefit.

In 2010 the Chancellor announced that from April 2011 most DWP administered benefits would be uprated in line with the Consumer Prices Index (CPI). Also, the government reiterated previous commitments to restore the link between earnings and the up-rating of the Basic State Pension. While most benefits were uprated in line with CPI in April 2011, Basic State Pension was exceptionally uprated in line with RPI. Please see the 2011 Benefit Uprating briefing report for more information.

The government introduced a ‘Triple Lock’ guarantee: that the Basic State Pension will increase by the highest of the growth in average earnings, price inflation or 2.5%. The earnings measure used by the Triple Lock calculation is Average Weekly Earnings (AWE).

The new State Pension (nSP) was introduced on 6 April 2016 for people reaching State Pension Age (SPA) from that date. People who had already reached SPA continued to be entitled to the Basic State Pension and Additional State Pension, where applicable. There are transitional arrangements and protected payments in place to ensure that the amount of State Pension an eligible individual receives is not less than under the previous system, based on their National Insurance record to 5 April 2016.  Please see The new State Pension – how it’s calculated for guidance.

The nSP is subject to the same up-rating arrangements as its predecessor. Up to April 2021, the nSP (excluding protected payments) was uprated in line with the Triple Lock commitment. Protected payments are uprated in line with CPI.

The government introduced the Social Security (Up-rating of Benefits) Act 2020 to enable the basic and new State Pensions, and the Standard Minimum Guarantee in Pension Credit, to be uprated in 2021/22. This legislation was required because the Social Security Administration Act 1992 (section 150A) prevents the Secretary of State from bringing forward an Up-rating Order if earnings growth is negative. The Social Security (Up-rating of Benefits) Act 2020 ensured when earnings were negative, that people claiming the State Pension saw an increase of 2.5%.

The Social Security (Up-rating of Benefits) Act 2021 introduced an amendment to suspend the earnings element of the ‘Triple Lock’ for 2022. This was due to exceptional earnings growth (8.3%) following the Coronavirus (COVID-19) pandemic. Consequently, the State Pension was uprated by the higher of CPI inflation growth or 2.5% at April 2022.

In April 2023, although the earnings element of the Triple Lock was reintroduced, State Pension was uprated in line with CPI of 10.1%. This is because CPI at September 2022 was higher than the annual increase to average weekly earnings, which was down to 5.5% in September 2022 from 8.3% in September 2021.

Table 1: Up-rating of State Pension was based on the Triple Lock guarantee between April 2011 and April 2023. For April 2022 the earnings element of the triple lock was suspended, and up-rating was based on the greater of Price Inflation (CPI) and 2.5%

Year	Up-rating percentage	Basis for up-rating
April 2011	4.6%	Price Inflation (RPI)
April 2012	5.2%	Price Inflation (CPI)
April 2013	2.5%	2.5% Minimum
April 2014	2.7%	Price Inflation (CPI)
April 2015	2.5%	2.5% Minimum
April 2016	2.9%	Earnings Growth
April 2017	2.5%	2.5% Minimum
April 2018	3.0%	Price Inflation (CPI)
April 2019	2.6%	Earnings Growth
April 2020	3.9%	Earnings Growth
April 2021	2.5%	2.5% Minimum
April 2022	3.1%	Price Inflation (CPI)
April 2023	10.1%	Price Inflation (CPI)

Source: Abstract of DWP benefit rate statistics

For people who reached SPA before 6 April 2016, Pension Credit has two elements:

• the Guarantee Credit, which provides a minimum level of income

• the Savings Credit, which aims to provide an additional amount for people aged 65 and over who have made some provision for their retirement

The Savings Credit element was removed for people reaching SPA from 6 April 2016 when nSP was introduced.

Legislation requires the Standard Minimum Guarantee (SMG) in Guarantee Credit to be uprated at least in line with earnings. Between 2016 and 2021, the SMG has risen at least in line with earnings. In April 2021, the SMG was raised by 1.9% to align the cash value of the uplift to Basic State Pension. In April 2022 and April 2023, it was increased in line with CPI inflation (by 3.1% and 10.1%, respectively).

Since April 2011, benefits to meet the additional costs of disability were increased in line with CPI price inflation, as were most discretionary benefits and tax credits for working age people.

Between 2013 and 2015, most discretionary benefits and tax credits for working age people were increased by 1% each year.

Under the Welfare Reform and Work Act 2016, most discretionary benefits and tax credits for working age people were frozen at the April 2015 rates for four years. When the Benefit Freeze ended in April 2020, the benefits were raised by 1.7%, in line with CPI price inflation. The benefits have risen in line with CPI price inflation every April since then:

• 0.5% in 2021

• 3.1% in 2022

• 10.1% in 2023

See the data tables (Table 5) accompanying this release for historical values of inflation and earning measures used for up-rating.

Coronavirus (COVID-19) pandemic and other impacts

In response to the outbreak of the coronavirus (COVID-19) disease in Great Britain, the Social Security (Coronavirus) (Further Measures) Regulations 2020 introduced additional temporary changes to the Social Security Benefits Up-rating Order. Temporary uplifts to Universal Credit standard allowances were payable from April 2020.

The temporary increases were removed in October 2021. At this time the UC earnings taper was reduced from 63% to 55%. Please see Universal Credit work allowances.

Between October 2021 and April 2023, Universal Credit standard allowance was paid at the rates set by the Social Security Benefits Up-rating Order 2021.

The coronavirus (COVID-19) pandemic also affected the ONS’ ability to capture survey and expenditure data used in its indices. The ONS has described the impact of the pandemic on their inflation and earnings statistics.

To learn about the impacts on price inflation indices please see section 1 of Coronavirus (COVID-19) and Consumer Price Inflation weights and prices: 2021

To learn about the impacts on the 2022 earnings surveys please see the ONS Employee earnings in the UK: 2022

4. The value of benefits compared to price inflation and earnings growth

Rates of the principal benefits for each up-rating can be found in the data tables accompanying this release.

The accompanying data tables show:

• the rate of the benefit at each up-rating date

• the percentage increase since the previous up-rating

• the percentage increase in prices between up-rating periods

• the value of the benefit at April 2023 prices at the date of up-rating

• over the period between up-ratings, the average value at April 2023 prices

• the benefit as a percentage of average earnings at the date of up-rating

For reasons of comparison and maintaining time series before CPI was created, where applicable, both the CPI and RPI are used to convert the values of each benefit to April 2023 prices in the enclosed tables.

How do the values of state benefits compare to price inflation?

In 2022 UK inflation reached a 40-year high, with annual CPI growth peaking at 11.1% in October of that year. This was driven by increases in fuel and food costs. While CPI inflation was still increasing in the period leading up to the 2023 up-rating, the rate of increase was relatively stable. In April 2023, CPI inflation was 8.7% (similar to April 2022, when CPI inflation was 9.0%).

At April 2023 most DWP benefits were uprated in line with CPI. Where benefits are uprated by CPI, the annual rate of CPI growth from the previous September is typically used and applied to benefit up-rating for the following April. The CPI figure used for up-rating was therefore 10.1%.

Basic State Pension rates for a single person since 2009 expressed in April 2023 prices

Source: Abstract of DWP benefit rate statistics

Since the introduction of the Triple Lock guarantee in April 2011, the value of the Basic State Pension has either exceeded or kept pace with CPI inflation.

The data tables published alongside this publication take the key state benefits at each benefit up-rating date and show the rate of benefit in payment for key claimant types. As prices generally rise each year, it is difficult to look at these benefit rates and sensibly compare them over time. Hence, the tables use various different measures of price inflation to convert all benefit rates to April 2023 prices. The benefit rates then become comparable across time in terms of the purchasing power of the benefit payment. Two price indices are used:

• the Consumer Prices Index (CPI)

• the Retail Prices Index (RPI)

Read an explanation showing Implications of the differences between the Consumer Prices Index and Retail Prices Index from the ONS

Relevant to this is a recent analysis published by ONS called Shortcomings of the Retail Prices Index as a measure of inflation

Please also see the Response to the joint consultation on reforming the methodology of the Retail Prices Index which sets out the latest thinking on suitability of the Retail Price Index.

The Rossi Index is defined as the RPI with all items except housing costs. It was used by DWP for the up-rating of income-related benefits between November 1983 and 1991. Housing costs were defined as mortgage interest, dwelling insurance and ground rent, local taxes, water charges, repairs and maintenance and DIY materials for repairs and decorations. The items excluded accounted for 7% of the items in the RPI.

Since the up-rating of April 1992 until April 2010, a revised version of the Rossi index (New Rossi) was used to uprate income-related benefits. The index is composed of the RPI (all items), excluding rents, local taxes and mortgage interest payments. The New Rossi series has been discontinued as of January 2017. Therefore, we have taken comparative data using New Rossi out of this publication. For further information, see the Clarification of publication arrangements for the Retail Prices Index and related indices from ONS.

Many benefits have been historically uprated in line with these indices since 1974. Hence, the real value of benefit payments had remained stable. Benefits such as State Pension and Pension Credit have seen some moderate growth in real value since 1974, due to up-rating policies linked to earnings in some years and policies to protect the income of those over State Pension age. That said, a combination of timing factors around up-rating and the suspension of the earnings element of the Triple Lock has meant the real value of State Pension and Pension Credit rates are the lowest since 2015.

The level of price inflation measured by CPI is usually lower than RPI. Until 2011, most DWP benefits were uprated by RPI or Rossi, meaning their real values relative to CPI increased in this period. Since April 2011, CPI has been the government’s preferred measure of prices and has been used to uprate benefits.

As noted above, the Welfare Reform and Work Act 2016 held the rate of most working age benefits at 2015 to 2016 levels. The benefit freeze was lifted by the April 2020 Up-rating Order. Since then, the benefits in question have been uprated using CPI based price inflation.

The benefits that were impacted by the freeze include:

• Jobseeker’s Allowance

• Employment and Support Allowance

• Income Support

• Housing Benefit for those below State Pension age

• Universal Credit

Carer’s and Disability elements within the benefits listed above were not included as part of the Freeze.

The Freeze also applied to Working Tax Credit, Child Tax Credit and Child Benefit, which are the responsibility of HM Revenue and Customs (HMRC) and HM Treasury.

Jobseeker’s Allowance rates for a single person aged 25 and over since 2006 expressed in April 2023 prices (using CPI as the up-rating measure)

Source: Abstract of DWP benefit rate statistics

In 2015, before the start of the benefit freeze, weekly Jobseeker’s Allowance payments would have represented the equivalent of £95.42 in April 2023 prices (based on CPI). This is worth an extra £6.83 when compared to April 2019, the last year of the freeze, as payments were worth £88.59 on the same basis. In April 2023, the rate for Jobseeker’s Allowance was set at £84.80, which is 12.5% below the 2015 rate when expressed in April 2023 prices.

How do state benefits today compare to average earnings?

Another way to analyse the value of state benefits across time is to compare the value of benefits to the average full-time wage. Average earnings are estimated each year using Employee earnings in the UK Statistical bulletins. This survey began in 2004, but average earnings statistics have been collected in a broadly comparable form since 1970.

The New Earnings Survey (Great Britain) (NES), which was conducted by the ONS each April between 1970 and 2004, gave a detailed picture of the pattern of earnings across the whole economy. Between 1970 and March 1983, the survey included full-time workers, aged 21 and over, whose earnings were unaffected by absence. From April 1983, the survey included full-time workers on adult rates, whose earnings were unaffected by absence. Employers were asked to provide information about the earnings of a 1% random sample of employees.

This survey was replaced in October 2004 by the Annual Survey of Hours and Earnings (ASHE). ASHE improved on the NES by extending the coverage of the survey sample, introducing weighting and publishing estimates of quality for all survey outputs.

The accompanying data tables show the rate of benefit as a percentage of average earnings in the same year.

As earnings have historically risen faster than prices, most benefits show a fall in value when compared to average earnings. The earlier benefit freeze has also suppressed the value of most working age benefits in relation to earnings growth.

Monthly Universal Credit standard allowance for a single person over 25 expressed as a ratio relative to median earnings since 2013

Source: Abstract of DWP benefit rate statistics

From 2014 to 2019, Universal Credit rates as a proportion of median earnings showed a downward trend.

Please note temporary uplifts to Universal Credit standard allowances were payable between April 2020 and October 2021 as a response to the Coronavirus (COVID-19) pandemic.

In April 2023, the monthly rate of Universal Credit for a single person above age 25 represented 12.5% of median earnings.

Basic State Pension for a single person expressed as a ratio relative to median earnings since 1987

Source: Abstract of DWP benefit rate statistics

State Pension and Pension Credit have often been uprated differently. Please see the State Pension Up-rating Briefing Paper from House of Commons Library for a comprehensive summary of the differences over time.

Basic State Pension and New State Pension have each in recent years shown a relatively flat profile when compared to average earnings. As noted above, since April 2011, for Basic State Pension and April 2017 for New State Pension the Triple Lock guarantee has ensured that payments increase by the highest of the growth in average earnings, price increases or 2.5%.

Between 1997 and 2020, the value of Pension Credit has risen against earnings.

It is important to note that the reference index for up-rating is Average Weekly Earnings (AWE) which is not the same as the data source for the earnings comparison used in this release (ASHE).

Finally, for further details on the ASHE estimates including the collation of data during the coronavirus pandemic and afterwards, see the ONS statistical bulletin, Employee earnings in the UK: 2023.

How do the rates of benefits compare with one another?

The data tables show the rates of the key state benefits at each up-rating and the real values (in April 2023 prices, using RPI or CPI). These real values are given at the point of up-rating. This represents the real value of that benefit (in April 2023 prices) at the date of first payment.

To give a better representation of the real value of the benefit across the whole period that rate was in force, the tables also show the real value of the benefit between up-rating periods. This calculation uses the average value of the benefit (in April 2023 prices) in each of the months the rate was used.

5. About this release

The tables accompanying this release can be found on the Abstract of DWP benefit rate statistics publication page. Please note that the data tables do not include supporting commentary and users should refer to this release and the policies and statements documents for background information.

This publication was assessed by United Kingdom Statistics Authority in June 2012 and designated as a National Statistic in June 2013, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Practice for Official Statistics.

Designation can be broadly interpreted to mean that the statistics:

• are well explained and readily accessible

• are produced according to sound methods

• are managed impartially and objectively in the public interest

Once statistics have been designated as National Statistics, it is a statutory requirement that the Code of Practice shall continue to be observed.

6. Known issues, changes and revisions to the abstract

As previously mentioned, the coronavirus (COVID-19) pandemic has had an impact on the survey methods and responses used by the ONS on both its inflation (CPI and RPI) and earnings (ASHE) measures. In the case of ASHE this is further affected by the impact of the Job Retention Scheme on furloughed earnings.

7. Where to find out more

This document, supporting tables and background information can be found on the Abstract collection page.

Quality and methodology statements for the Abstract of DWP benefit rate statistics can be found under our policies and statements section.

For more information about the up-rating applied in the period up to April 2023 please see Benefit and pension rates 2023 to 2024.

For more information on the differences between CPI and RPI please read the Inflation and price indices.

Please also see an analysis by the ONS called Shortcomings of the Retail Prices Index as a measure of inflation.

Details of other National and Official Statistics produced by the Department for Work and Pensions can be accessed via the Statistics at DWP page.

8. Contact information and feedback

Lead Statistician: Tonia Hagan, [email protected]

Feedback

We are seeking your views about this publication. To help shape future releases we would very much like to learn more about how the release is being used, and how easy it is to find the information you need.

We are also asking for feedback on the suitability of sources used in relation to inflation and earnings. Your response to the questionnaire will help us understand the way our statistics are used and what users consider important.

Please see DWP abstract of DWP benefit rate statistics: user questionnaire.

Please send comments by email to: [email protected]

ISBN: 978-1-78659-608-6