Benefits recipients could lose £1 billion

The Times claimed today ministers "have backed a compromise to use a lower inflation rate of 4.5%, based on average inflation during the six months to September", which it says could mean benefits recipients collectively lose nearly £1billion.

Certain benefits are due to rise in April in line with September's consumer prices index (CPI) inflation rate, which was 5.2%.

When we asked the Government whether it could guarantee next April's benefits uprating would be based on September CPI, a Treasury spokesman said: "The March Budget set out the process for uprating a range of benefits by September's CPI inflation measure. We are not going to comment on speculation."

The fact CPI inflation is due to be used is controversial in its own right, even if the Government sticks to its plan.

Next April's rises will be the first time the uprating is calculated using CPI rather than the retail prices index (RPI) rate of inflation, which tends to be higher. It was 5.6% in September.

The basic state pension and employment benefits, such as jobseeker's allowance and income support are among the government payments due to rise in line with the September CPI rate.

Next year's benefits rates will not be formally unveiled until later this year.