Policy background
Up-rating is the annual mechanism by which the Secretary of State is required by law to conduct a review of applicable benefit and pension rates each year to determine whether they have retained their value in relation to the general level of prices or earnings. Where the relevant benefit or pension rates have not retained their value, legislation provides that the Secretary of State is required to (or in some instances may) up-rate their value. There are three sets of benefit groups:
those that must rise at least in line with earnings: these are the basic State Pension and the full rate of the new State Pension, the Standard Minimum Guarantee in Pension Credit and survivors’ benefits in Industrial Death Benefit.
those that must rise at least in line with prices: the largest of these are Personal Independence Payment, Disability Living Allowance, Attendance Allowance, Carer’s Allowance and the Additional State Pension. These are largely additional needs benefits.
those over which the Secretary of State has discretion: the largest of these is Universal Credit but also included are Employment and Support Allowance and Jobseeker’s Allowance. This group is often referred to as the ‘working age benefits’.
	Since 2011, the up-rating process has used the September Consumer Prices Index (CPI) figure for the rise in prices and the May-July Average Weekly Earnings (AWE) figure for the growth in earnings.
	The primary power for up-rating which is contained in the Social Security Administration Act 1992 (the 1992 Act) does not allow the Secretary of State to bring forward an annual up-rating order if earnings / prices are negative. Due to the impact of the Coronavirus pandemic this year there will be no increase in earnings over the review period and therefore no up-rating if earnings are static.
	This Act allows the Secretary of State to up-rate the basic pension and certain other benefits in the tax year 2021-22 despite there being no growth in earnings in the period May-July 2020. This will allow the Government to meet its commitment to the Triple Lock.