I pointed out in May, here, that the real value of benefits in 2011 would be reduced by 10% by 2020, 25% by 2033 and halved by 2062. This was the effect of the move to uprating benefits by CPI instead of RPI, assuming that RPI, used before 2012, reflected the real change in the cost of living.

The publication of today’s Bill implementing the announcement in the Autumn Statement of a three year uprating for most benefits of 1% changes this.

Using the Office of Budget Responsibility’s updated inflation forecasts, together with this uprating announcement, we now see the reduction in real values taking effect much earlier:

10% reduction in real value in 2017
25% reduction in real value in 2030
50% reduction in real value in 2060

This is, of course, only the value of the ‘needs’ side of a benefit award. Other cuts and rule changes, and the introduction of Council Tax Support schemes, may make things even worse.