Healey Faces £1.7bn Bill as Inflation-Linked Spending Soars

The UK's benefits bill is expected to rise by an additional £1.7 billion if inflation remains high, according to a recent warning from the Institute for Fiscal Studies (IFS). This increase would be due to price rises caused by the ongoing Iran war, which has led to higher inflation rates.

Prices rose by 2.9% in the year to July, exceeding the Bank of England's target of 2%. Economists predict that inflation will continue to rise, potentially breaching 3% in the coming months.

The IFS estimates that if inflation remains at 2.9%, John Healey would need to find an extra £1.7 billion from 2027-28 onwards to raise benefits payments in line with price rises. This is equivalent to funding over 20 new fighter jets or 25,000 soldiers' salaries.

Working-age benefits are typically uprated in line with September's inflation rate. The Office for Budget Responsibility predicted that inflation would stand at 2.1% before the war, but current rates suggest it will be higher.